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| | | Article Name : | | | The Nexus between Asset Tangibility and Firms’
Financial Performance:
A Panel Study of Non-Financial Firms Listed on the
Ghana Stock Exchange (GSE) | | Author Name : | | | MOHAMMED MUSAH, YUSHENG KONG, AGYEMANG ANDREW OSEI | | Publisher : | | | Bridge Center | | Article URL : |  | | | Abstract : | | | This study sought to explore the nexus between asset tangibility
and the financial performance of non-financial firms listed on the
Ghana Stock Exchange (GSE). Specifically, the study sought to;
examine the association between tangibility and the firms’ financial
performance as measured by ROA, determine the connection between
tangibility and the firms’ financial performance as measured by ROE;
and to find out the affiliation between tangibility and the firms’
financial performance as measured by ROCE. This study was a
quantitative study as it aimed to classify features, quantify them in
terms of numbers and create a statistical model to test hypothesis and
explain observations. The study was specifically correlational in nature
because, it sought to examine the relationship between asset tangibility
and the firms’ financial performance. The study was finally panel in
nature because, it sought to gather information on the same study
units at different points in time. A balanced secondary panel data
sourced from the audited and published annual reports of the Ghana
Oil Company Ltd, Total Petroleum Ghana Ltd, Starwin Products Ltd, Camelot Ghana Ltd, Aluworks Ltd, Clydestone Ghana Ltd, African
Champion Industries Ltd, Benson Oil Palm Plantation Ltd, Fan Milk
Ltd, Guinness Ghana Breweries Ltd, Unilever Ghana Ltd, PZ Cussons
Ghana Ltd, Produce Buying Company Ltd, Mechanical Lloyd
Company Ltd and Sam Woode Ltd for the period 2008 to 2017 was
used for the study. Both the descriptive and inferential techniques of
data analysis were employed for the study. In the descriptive technique
of data analysis, the mean, standard deviation, variance, minimum
and maximum values, range, skewness and kurtosis of the study’s
variables were analysed, whilst the Pearson Product-Moment
Correlation Coefficient technique of data analysis was employed to
establish the link between asset tangibility and the firms’ financial
performance (inferential analysis). All the data analysis were
conducted through the use of STATA version 15 statistical software
package at an alpha (?) level of 5% (p?0.05). From the study’s Pearson
Product-Moment Correlation Coefficient estimates, asset tangibility
had an insignificantly positive relationship with the firms’ financial
performance as measured by ROA. However, financial performance as
measured by ROE and ROCE had a significantly adverse association
with asset tangibility. The significantly negative affiliation between
asset tangibility and the firms’ financial performance may imply, the
firms were using their tangible assets as collateral to secure more debt
financing. This may be so because, the tangibility of firms’ assets can
serve as a proxy for agency costs of debt and the costs of financial
distress. Firms with more tangible assets have in general a greater
ability to secure debt as these assets can be used as collateral. Thus,
asset tangibility is expected to have a positive link with leverage. But
highly levered firms tend to have minimal profitability. The sampled
firms must therefore be cautious in using their tangible assets as a bait
for more debt financing. Also, the firms should concentrate on building
goodwill for themselves. This point is raised because, firms with high
levels of intangible assets (for instance goodwill) have more growth
prospects and investment opportunities in the long-term. They also
boost of innovation, research and development. | | Keywords : | | | Nexus, Asset Tangibility, Financial Performance, NonFinancial Firms, Ghana Stock Exchange (GSE), Return on Assets(ROA), Return on Equity (ROE), Return on Capital Employed
(ROCE). |
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