Department of Accounting and Finance

URI for this collectionhttps://rps.wku.edu.et/handle/123456789/46627

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DETERMINANTS OF BUDGET CONTROL IN PUBLIC ORGANZATION A STUDY WITH REFERENCE TO SOUTHERN NATIONS, NATIONALITIES, AND PEOPLES’ REGIONAL STATE (SNNPRS
(wolkite university, 2018-03-07) Getachew Mamo
The main purpose of this study was to investigate the determinants of budget control in the Southern Nations, Nationalities, and Peoples’ Regional State public organizations. This investigation was focus on five purposely selected public organization that are expected to represent all other bureaus. From the total population, (watson 2001) formula was used to determine sample of respondents. The management team, the internal and external auditors, budget experts, finance officers, tax and planning experts of the selected public organization were the sources for the required data to the study through questionaires adminstered. The STATAS soft ware was used to analize the data using descriptive statistics, including mean, standared deviation and logistic regression used to analysis inferential output. For this study, eight independant variables were identified including budget planning process, management support, competent internal audit staff, organizational commitment, budget monitering and evaluation, information and communication, cost reduction and competency of human resource in budget department. The dependent variable is degree of budget control which was measured under Binary logistic regression. According to the logistic regression output, budget planning process, competent internal audit staff, organizational commitment and competency of human resource in budget department were contributed for the budget control in the public sector significantly and positively but budget monitoring and evaluation for the budget control was negatively and significantly related. The other variables organizational commitment were positively related with the budget control, but its contribution for the budget control were statistically insignificance at 5% level and management support also positively related with the budget control, but its contribution for the budget control were statistically insignificance at 5% level. All of these eight independent variables are making 50.93% of the contributions for budget control in the public organization. Then, the researcher recommend that public organizations should understand the contributions of these five variables collectively significant and their odd ratio were greater than one to infinity indicate the relationship between those predictors and the outcomes and add values for the budget control in the public sector offices.
DETERMINANTS OF TAX COMPLIANCE OF MICRO AND SMALL BUSINESS ENTERPRISE (MSE) CATEGORY “C” TAXPAYERS, THE CASE OF SOUTHWEST SHOA ZONE, ETHIOPIA
(2018-05-09) GETAHUN AYANSA BIRAE
This study sought to identify the determinant of tax compliance in Ethiopia, specifically focusing on Micro and Small business enterprises operating in South west shoa zone. The researcher outlined a detailed literature review and identified the variables for this research to be tax rate, tax knowledge, tax compliance cost; attitude of Micro and small enterprises and tax system. The research employed both descriptive and explanatory research design. A sample size of 325 were used from a population of 1726 micro and small business enterprises category “C” taxpayers in south west shoa zone. Data was collected using questionnaires and structured interview. The collected data was consequently analyzed using Statistical Package for Social Scientist software (SPSS V.22) and the findings of the research presented using tables, various chart types and graphs. The results showed that tax rate, tax knowledge, tax compliance cost, attitude of SME’s and tax system significant determine tax compliance of taxpayers. Tax rate, Tax system and compliance cost predominantly affect tax compliance. With regard to cost of tax compliance, the study revealed that Micro and Small businesses incur different costs such as salary of accountants, fees to tax consultants, cost of stationeries, etc. that contributed for their non compliance and estimation of Micro and Small Enterprises tax is another problem related tax system. However, the taxpayers do feel and strongly agree that the taxation system in Ethiopia is in great need of improvement. The study then recommended that the current tax law should be amended to incorporate provisions that grant special tax incentives to MSEs in order to improve voluntary tax compliance by MSE taxpayers. The study also recommended that the ERCA should disseminate information on tax rate and tax system more frequently in order to improve the levels of tax knowhow for voluntary tax compliance.
ASSESSMENT OF TAX AUDIT PRACTICE AND ITS EFFECTIVENESS IN ENHANCING TAX REVENUE THE CASE OF LARGE TAX PAYERS BRANCH OFFICE OF ETHIOPIAN REVENUE AND CUSTOMS ATHORITY
(wolkite university, 2018-06-08) MELAKU KINFE
The purpose of this study is to assess the tax audit practice and its effectiveness in enhancing tax revenue of large tax payers’ office. The study examines tax audit practice and its effectiveness with dimensions of experience and capable audit staff, tax payer’s record keeping, tax payer’s office information system, audit case selection and examination method, the type of audit used and frequency of tax audit influence audit effectiveness in LTO. In light of this objective the study adopted mixed research method of research approaches. Specifically, the study used survey of questionnaire analysis offices’ on tax auditors and team leader, and interview analysis on team leaders and process owners. Then tax auditors and team leaders were selected based on Census method, because, the target population studied is small. In large tax payer’s office there were 80 tax auditors supervised and lead by 10 team leaders managed by two process owners. Then the researcher distributed those questionnaires to the 90 tax auditors and team leaders, only 80 of them were returned. Consequently, Data was then analyzed on quantitative basis using inferential statistics (Anova and linear regression analysis) and descriptive statistics (frequency, percent, mean and standard deviation). Qualitatively interview was presented to process owners. The results of the study enable us to conclude that tax audit type, experience and capability of audit staff and audit case selection and examination method as a linear combination significantly influence tax audit effectiveness in the organization studied. However, tax payers record keeping, tax payers information system and frequency of tax audit were not significantly to undermine tax audit effectiveness. In the end, the study forwards the possible measures to be taken by the Ethiopian Revenue and Customs Authority to mitigate problems in tax audit operation. The authority should conduct further study to alleviate the problems which are related to tax audit.
Determining Factors of Liquidity of Private Commercial Banks in Ethiopia
(wolkite university, 2019-03-07) Abenezer Tesfaye
This study intended to examine the determinants of Liquidity in Private Commercial Banks in Ethiopia. In view of that, this study determined the bank specific and macro-economic factors affecting bank liquidity for Six Private commercial banks in Ethiopia, covering the period of 2000-2017 by using balanced fixed effect panel regression. The findings of the study showed that capital adequacy, and inflation had statistically significant and positive relationship with banks’ liquidity. Bank size had a negative and statistically significant impact on Private Commercial banks .Loan growth had positive and statistically insignificant impact on Private Commercial banks. GDP growth rate has statistically insignificant and positive influence on the liquidity of private commercial Banks. Inflation had positive and significant impact on banks liquidity. On the other hand, the results of the study profitability were quite surprising. The result is conflicting with researcher’s expectations and also a finance theory which emphasizes the negative correlation of liquidity and profitability. Moreover, the coefficient of profitability was not statistically significant, implying that its Influence is insignificant. This positive relation shows that, higher profitability leads to increase banks liquidity. Conclusion about the impact of Ethiopian bank’s profitability on liquidity remains ambiguous and additional investigation is required. The researcher recommended that to maintain adequate system for managing liquidity of private commercial banks in Ethiopia.
IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABLITY: EVIDENCE FROM SELECTED MANUFACTURING COMPANIES IN SNNPRS, ETHILOPA
(wolkite university, 2019-04-08) Abiyot Gossaye Teka
Working capital management is the administration of current assets and current liabilities and it is directly affects the liquidity and profitability of company. Hence, efficient working capital management involves excessive planning and controlling and it is very important to equalize between current assets and current liabilities to eradicate the risk of insolvency. The objective of this study is to examine the impact of working capital management on firms’ profitability and review the statistical significance between components of working capital management. In light of this aim the thesis implement quantitative method of research approaches to test the study hypothesis. Hence, the study used survey of companies audited financial statements. The purposive sampling method was used. Consequently, the study selected a sample of 11 companies for the period of eight years (2010-2017). Data was analyzed on quantitative basis using descriptive and regression analysis (Pooled ordinary least square) method was used. It observe the components of working capital for instance accounts receivable management, inventory holding period, accounts payable period, and cash conversion cycle in relation to ROA. In addition the study observes current ratio, company size, company growth and debit ratio as control variables. The key results from the study are; a negative significant at 5 percent relationship between account receivable management and profitability. Cash conversion cycle have a negative and statically significant at 5 percent relation with profitability. Opposed to the research hypothesis, account payable period has a negative statically significant at 5 percent relation with profitability. The manufacturing company of SNNPRS, Ethiopia managers can increase profitability of their firms by limiting the time gap between a company’s expenditure for purchases of raw materials and the collection of sales of finished goods. In general the study recommended that firms should minimize working capital management components in order to maximize profitability.
IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABLITY: EVIDENCE FROM SELECTED MANUFACTURING COMPANIES IN SNNPRS, ETHILOPA
(wolkite university, 2019-05-08) Abiyot Gossaye Teka
Working capital management is the administration of current assets and current liabilities and it is directly affects the liquidity and profitability of company. Hence, efficient working capital management involves excessive planning and controlling and it is very important to equalize between current assets and current liabilities to eradicate the risk of insolvency. The objective of this study is to examine the impact of working capital management on firms’ profitability and review the statistical significance between components of working capital management. In light of this aim the thesis implement quantitative method of research approaches to test the study hypothesis. Hence, the study used survey of companies audited financial statements. The purposive sampling method was used. Consequently, the study selected a sample of 11 companies for the period of eight years (2010-2017). Data was analyzed on quantitative basis using descriptive and regression analysis (Pooled ordinary least square) method was used. It observe the components of working capital for instance accounts receivable management, inventory holding period, accounts payable period, and cash conversion cycle in relation to ROA. In addition the study observes current ratio, company size, company growth and debit ratio as control variables. The key results from the study are; a negative significant at 5 percent relationship between account receivable management and profitability. Cash conversion cycle have a negative and statically significant at 5 percent relation with profitability. Opposed to the research hypothesis, account payable period has a negative statically significant at 5 percent relation with profitability. The manufacturing company of SNNPRS, Ethiopia managers can increase profitability of their firms by limiting the time gap between a company’s expenditure for purchases of raw materials and the collection of sales of finished goods. In general the study recommended that firms should minimize working capital management components in order to maximize profitability.
Factors Affecting Internal Audit Effectiveness in Governmental Sectors: Case Study in Guraghe Zone
(wolkite university, 2019-06-09) Abidlemewella Bedewi
The main purpose of this study was investigating factors affecting internal audit effectiveness in governmental sectors in guraghe zone, SNNPRS. As a result, the study used 13 randomly selected sectors (four out of eleven regional sectors with IA work process, one & the only federal sector and eight out of fifteen zonal sectors with IA work process) out of purposively selected 27 governmental sectors that have IA work process. The sectors were stratified into three strata (federal government, regional government and zonal government related sectors). Simple random sampling was applied on each stratum to get sectors that were used to form the sample size. Distributing two types of prepared questionnaire to 128 top management & IA, primary data was collected from 116 respondents (response rate 90.625%). Descriptive statistics & OLS multiple linear regression to measure IAE and to identify factors affecting IAE were applied respectively. Internal audit independence, management support, adequate and competent internal audit staff, sufficiency of budget, level of objectivity, approved IA charter, unrestricted information access and professionally competent team leader were hypothesized factors to be investigated and all of these factors were expected to have positive and significant impact on IAE. Out of these eight factors, internal audit independence, sufficiency of budget and unrestricted information access, were factors identified to have positive and significant contribution to IAE & internal audit independence was identified to be the most important deriver of IAE. But management support, level of objectivity, approved IA charter and professionally competent team leader were investigated to have insignificant positive contribution to IAE. Beta sign to adequate and competent internal audit staff showed that the variable has negative and insignificant contribution to IAE. Regression output of the analysis showed that 62.3% of the study is explained by the model and it showed that all of the variables collectively could play very important role to contribute for IAE.
FACTORS AFFECTING COMMITTING OF ACCOUNTING FRAUD IN PUBLIC AND PRIVATE BANKS IN WOLKITE TOWN OF GURAGE ZONE, ETHIOPIA
(wolkite university, 2019-08-09) YALEW KIBRU SHIRGA
A study entitled factors affecting committing of accounting fraud in public and private banks in Wolkite town of Gurage zone, Ethiopia was conducted with the aim of identifying the types of accounting frauds committed and identifying major motivating factors for employees responsible for committing accounting frauds. Data for this study were collected using a semi-structured questionnaire. Both descriptive and econometric methods of data analysis were used for analysing data. Multiple linear regression model as part of the econometric analysis was used to analyse and identify factors affecting committing of accounting fraud in bank. The result of descriptive analysis showed that employees in bank are forced to commit frauds because of the motivation, the opportunity they accessed and rationalization. The result of econometric analysis also revealed that variables namely adherence to accounting rules, internal control effectiveness management morality, information asymmetry, and suitability of the motivational rewarding system were found to significantly determine the commitment of accounting fraud in private and public banks in the study area. The study finally recommended that limiting employees’ access to only the assets, systems, and information necessary for them, keeping in the morality of management, providing different incentive and compensation mechanisms, strengthening the internal bank controlling systems, communicating the employees in a bank with uniform information, and improving awareness of the employees to obey for the accounting rules for minimizing the accounting fraud in private and public banks.
FACTORS AFFECTING THE EFFECTIVNESS OF SAVING & CREDIT COOPERATIVES IN GURAGHE ZONE
(wolkite university, 2019-08-09) GINBARU TEKLE
The main purpose of this study was to investigate factors affecting the effectiveness of saving and credit cooperative in Guraghe zone. The study followed simple random sampling research design. Using simple random sampling, 109 sample SACCOs were taken from the study area. Data used primary data collected from board chair person based on designed questionnaires and also data used the logistic regression model was used for the analysis. The major factors that affecting effectiveness of SACCOs are favorable for saving, fair policy and regulation, amount of saving to members, working time, and membership size which has a strong association and statistically significant. In addition the major factors that affect SACCOs effectiveness and statistically significant is level of Equib and Edir. Therefore the researcher recommends SACCOS should give high attention in attracting members to increase their source of fund by providing awareness about the benefit of joining SACCOS by using different social Medias, by creating training programs, through distribution of brochure to clients if fund is available should encourage members to take loan to increase dividend for idle funds, should charge compatible interest rate on loan to members to attract members, and also the government establishes cooperative bank then bank of cooperative to regulate SACCOs cooperative every activities. Finally Federal cooperatives agency should pay attention to decide for the government to establish cooperative bank of SACCOs as they help many people in providing loan as well as saving services and they are one of the financial service providers that highly contribute for effective financial services for the country
DETERMINANTS OF INTERNAL AUDIT EFFECTIVENESS IN SELECTED GOVERNMENT UNIVERSITIES OF ETHIOPIA
(wolkite university, 2020-05-07) SEIFU SHIGAZE SHEMBIR
The increasing rate of financial irregularities, fraud, and mismanagement in Ethiopian Government Universities calls for concern. Despite all control measures put in place by the government, coordinating and regulating agencies, lack of transparency and accountability continues strongly. The objective of this study was to assess determinants of the effectiveness of internal audit in selected government universities of Ethiopia. The study employed explanatory survey research design along with both quantitative and qualitative approaches. Purposive sampling technique was used to select ten universities, 4 from the first generation; 3 from the second generation; and 3 from the third generation, from the total of 44 universities. Primary data have been used using self – administered questionnaires for 95 internal audit staffs, 45 middle level and 36 top level managements and semi – structured interview for 7 internal audit directorate directors. A total of 183 respondents were participated in the study. Secondary source of data also used by reviewing documents related to internal audit functions. Descriptive statistics and multiple linear regression model were used to analyze the quantitative data to examine the effect and relationship between IA effectiveness and six determinant factors of IA effectiveness. All the quantitative data was analyzed using a Statistical Package for Social Sciences (SPSS) version 20.The findings of the study revealed that among the four significant factors: independence of internal auditors, competency of internal auditors, internal audit work quality and organizational setting; independence of internal auditors was the most dominant determinant factor for the effectiveness of internal audit. However, 73.5% of the variations in the effectiveness of the internal audit of the universities were jointly accounted by the six variables including management support and perception of managements towards internal audit work value. Therefore, the effectiveness of internal audit in government universities is under question, unless these determinant factors are appropriately pledged. Thus, this study suggests that concerned bodies on government universities have to give attention on the development of internal auditors to be hired at the university level or should arrange ways so that the existing internal auditors in the universities to have continuous professional development.
DETERMINANTS OF BANKS’ INTERNAL AUDIT QUALITY: A STUDY ON SELECTED COMMERCIAL BANKS IN ETHIOPIA
(wolkite university, 2020-05-07) JEMAL AWOL
This study examines the determinants of internal audit quality in selected commercial banks in Ethiopia. The study used purposive sampling method and covered the head office internal auditors of selected Ethiopian commercial banks. Mixed approach method was adopted in the study. Data were collected by self-administered questionnaire to 130 internal audit department staffs of the commercial banks. These questionnaires were constructed in 5-point Likert scale, distributed to internal auditors of selected Ethiopian commercial banks. Multiple Regression (OLS) has been employed to regress the data obtained. The result of this study shows that top management support, promotion and reward, physical work environment and auditors’ performance were strong and has statistically significant effect on internal audit quality. As the regression results shows availability of budget, training and development autonomy to implement internal audit techniques have insignificance effect on internal audit quality. The study recommends that Ethiopian commercial banks must work to ensure the availability of the key factors to achieve the quality of internal audit function.
BENEFITS AND CHALLENGES OF USING INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS): A STUDY ON ETHIOPIAN PUBLIC ENTERPRISES
(wolkite university, 2020-05-08) BEKELE JARSA NESHIER
International Financial Reporting Standards (IFRS) are set of Accounting Standards developed by International Accounting Standard Board (IASB) that is the global standards recognized for thepreparation of companies’ financial statements. This study examines benefits and challenge of implementation of IFRS in Ethiopian public enterprises which establish in accordance with financial reporting proclamation # 847/2014, the study also identifies the factors that facilitate implementation of IFRS in Ethiopian public enterprises. Primary data were collected through five Point Likert-scale questionnaires. The study used non-random sampling of judgmental technique to select 10 enterprises from 22 enterprises based on nearness of the company and time of establishment.SPSS used to analyze a data collected through questionnaire the questionnaire data were analyzed using descriptive statistics, correlations, parameter estimiat and Ordinal Logistic Regression analysis. The findings revealed that IFRSimproves effectiveness of financial reporting, provides greater reporting transparency,it reduce cost of capital, It provides better information for decision making, make confidence for lender,enables better risk management and provides greater creditability.The study also foud that IFRS Implementation have challenges. It is costly, IFRS increases the complexity of financial reporting, Lack of IFRS implementation guidance affects the implementation of IFRS and increases the risk for manipulation in interpretation of financial statements, IFRS increased volatility of earnings, Tax driven nature of previous standards is a challenge for IFRS implementation, lack of proper instructions from regulatory bodies and Problem with IT system. The study also revealed Management support, Institutional readiness, Educational level, and Enforcement capacity significantly affect the quality of IFRS implementation in Ethiopian public enterprises. The findings suggest that a rigorous IFRS capacity building program should be embarked by the government, allregulatory bodies, enterprises and training institutions in order to provide the needed manpower for IFRS implementation.
DETERMINANTS OF INTERNAL AUDIT EFFECTIVENESS IN SELECTED GOVERNMENT UNIVERSITIES OF ETHIOPIA
(wolkite university, 2020-06-06) SEIFU SHIGAZE SHEMBIR
The increasing rate of financial irregularities, fraud, and mismanagement in Ethiopian Government Universities calls for concern. Despite all control measures put in place by the government, coordinating and regulating agencies, lack of transparency and accountability continues strongly. The objective of this study was to assess determinants of the effectiveness of internal audit in selected government universities of Ethiopia. The study employed explanatory survey research design along with both quantitative and qualitative approaches. Purposive sampling technique was used to select ten universities, 4 from the first generation; 3 from the second generation; and 3 from the third generation, from the total of 44 universities. Primary data have been used using self – administered questionnaires for 95 internal audit staffs, 45 middle level and 36 top level managements and semi – structured interview for 7 internal audit directorate directors. A total of 183 respondents were participated in the study. Secondary source of data also used by reviewing documents related to internal audit functions. Descriptive statistics and multiple linear regression model were used to analyze the quantitative data to examine the effect and relationship between IA effectiveness and six determinant factors of IA effectiveness. All the quantitative data was analyzed using a Statistical Package for Social Sciences (SPSS) version 20.The findings of the study revealed that among the four significant factors: independence of internal auditors, competency of internal auditors, internal audit work quality and organizational setting; independence of internal auditors was the most dominant determinant factor for the effectiveness of internal audit. However, 73.5% of the variations in the effectiveness of the internal audit of the universities were jointly accounted by the six variables including management support and perception of managements towards internal audit work value. Therefore, the effectiveness of internal audit in government universities is under question, unless these determinant factors are appropriately pledged. Thus, this study suggests that concerned bodies on government universities have to give attention on the development of internal auditors to be hired at the university level or should arrange ways so that the existing internal auditors in the universities to have continuous professional development.
FACTORS AFFECTING CREDIT ACCESSIBILITY OF SMALL AND MEDIUM ENTERPRISES IN SOUTH WEST SHOA ZONE
(wolkite university, 2020-08-07) DEBEBE WORKINEH OLGA
The purpose of this study is to investigate factors affecting credit accessibility of small and medium enterprises in south-west shoa zone. The main research objectives addressed in this study were: - To identify the extent of collateral requirement, how credit facility non-awareness, structure of financial sector, and distances from financial institutions affect credit accessibility, and to what extent management competency and small business support influences credit accessibility of small and medium enterprises in South West Shoa Zone. The study adopted both descriptive and explanatory research design. The population of the study consists of 1,193 Small and medium enterprises registered on Enterprise and Industry Development office of south-west shoa zone and Woliso Town Enterprise and Industry Development office. Stratified sampling technique has been used by dividing the population into two geographical areas to determine the total sample size of 299 enterprises. Both quantitative and qualitative data were used in the study. Data was collected using research questionnaires from sample selected of SMEs based on sampling techniques and structured interviewees conducted with 9 Banks and 6 microfinance institutions operating in the zone. Descriptive statistics was used to analyze data including frequencies, percentages, mean, standard error and confidence interval. Quantitative data were entered; cleaned and analyzed using stata13 version statistical software and using econometrics model; correlation and multiple regressions were used to show the relationship between variables. The study was employed credit accessibility as a dependent variable; while collateral requirement, credit facility non-awareness, structure of financial sector, distance from financial institutions, management competency and small business support were used as independent variables. The findings of the study shows collateral requirement, credit facility non-awareness, and structure of financial sector and distance from financial institutions have significant negative relationship, and management competency and small business support have positive relationship with credit accessibility of small and medium enterprises. The study recommended; financial institutions needed to consider receivable, inventory, equipment, and personal guarantee can be pledged as collateral, small and medium enterprises themselves take time to search for other financial institutions than limiting themselves to government microfinance, the concerned government body needed to make small and medium enterprises exhaustive awareness about credit facility in order to minimize his burden on small and medium enterprises in the country, financial institutions were needed to make exhaustive advertisement about credit terms and types they were providing, financial institutions needed to recognize small and medium enterprises up on organization of their structure, setting cost of financing, credit risk mitigation, setting credit policies and procedures, and liquidity risk calculation, financial institutions were needed to open their branches near to small and medium enterprises location, small and medium enterprise owners or managers needs managerial training to make sure their businesses are stable, and government needed to support small and medium enterprises in giving resources, market linkage, legalization and leasing.
THE EFFECT OF WORKING CAPITAL MANAGEMENT ON FIRM‟S PROFITABLITY: EVIDENCE FROM SELECTED MANUFACTURING COMPANIES IN ADDIS ABABA ETHIOPIA.
(2021-01-07) ABDULAZIZ BEREDA
The main purpose of this study was to determine empirically the impact of working capital management on profitability. To indicate relationship between these two, the author collected secondary data from 19 manufacturing companies in Addis Ababa, Ethiopia for the period of 2015 to 2019. Inventory holding period, Accounts receivable period and accounts payable period are used as independent working capital policy variables. However, cash conversion cycle (CCC) and current assets to total assets ratio are used as comprehensive measures of working capital investment policy. On the other hand, current liabilities to total assets ratio is used as measure of working capital financing policy. The regression results show inverse relationship between inventory holding periods and accounts receivable with profitability. However there is statistically insignificant relationship between accounts payable period and profitability. The results also show that there exists significant negative relationship between profitability of the sampled firms and cash Conversion cycle (CCC). In hence to that there is significant positive relationship between current assets to total assets ratio and profitability measures has been observed. The other hand, results show that a significant positive relationship between current liabilities to total assets ratio and profitability. To be profitable, firms must try to keep these numbers of days account receivable and inventory turnover days to minimum level. This also helps to minimal the cash conversion cycle (CCC). Since aggressiveness of working capital management investment policies is inversely related to profitability, and aggressive investment policy positively related with profitability, the financial managers of manufacturing Companies should follow conservative investment policy and aggressive financing policy in their working capital management in manufacturing companies. Data and Data Collection to gather the necessary data copies of audited financial statements in the form of income statement and statement of financial position over the period of five years has been use. The population of study will comprised 19 manufacturing share companies in Addis Ababa Ethiopia. The E – views-9 software has been used to analyse financial data and Researcher used panel Least Squares methods for analysis.
DETERMINANTS OF FINANCIAL REPORTING QUALITY ON ETHIOPIAN INSURANCE COMPANIES
(wolkite university, 2021-03-08) MULUKEN WELIKA NEGERI
This study intends to assess the determinants of financial reporting quality of Ethiopian insurances companies over a period of 2014-2019. Consequently, the study used document review of insurances’ audited financial statements. The explanatory variables used in this study were Board Size (BS), Leverage (LE), Profitability (ROA), Liquidity (LQ), Auditor Change(AC), Firm Age (FA) and Firm Size(FS). In this study sixteen Insurance companies were selected from a total population of insurances companies to accomplish a study for the period of six years (2014-2019) with the total of 96 observations. Moreover, for the dependent variable data were collected for seven years period, from (2013-2020). To test the hypotheses, the study adopted the quantitative research approach. The secondary data were analyzed using descriptive statistics, correlation matrix and linear regression analysis and data from document reviews were interpreted qualitatively. The study used panel data and random regression model to analyze the Determinants of Financial Reporting quality of Ethiopian insurance companies. The study found that profitability ratio has positive and significant effect on financial reporting quality. While, auditor changes, board size, leverage and liquidity were found to be insignificant effect on financial reporting quality of Ethiopian insurance companies. It is recommended that insurance companies should do to improve their liquidity management systems through broadening and diversifying of funding sources and shortening asset maturities that leads to a better quality of financial report.
DETERMINANT OF CORPORATE DIVIDEND PAYOUT DECISION A STUDY ON INSURANCE COMPANIES IN ETHIOPIA.
(wolkite university, 2021-03-08) HinsermuMegerso
Dividend policy decision is essential and has a great influence on financial structure, flows of funds and corporate liquidity. Even if several studies have been done by different researchers it still remains unsolved. This research work tried to explore the determinants of corporate dividend payout in Ethiopian insurance companies on basis of data covers ten years (2012-2021) period. Key explanatory variables were identified and these variables are profitability, firm size, growth opportunity, leverage, liquidity, GDP and inflation. In order to achieve objective of the research quantitative research method and explanatory research approach and 10 years panel data from annual audited report of nine private insurance companies were employed. Fixed Random effect model used to identify the most significant variable because of hausman test result indicate the p-value was appropriate to use fixed random. The result of the study shows that profitability, growth opportunity, leverage, inflation and GDP have found to have statistically significant relation with the dividend payout. While the remaining variables found to have statistically significantbut rejected relation with the dividend payout in Ethiopian insurance industry. When designing dividend payout policy mangers of Ethiopian insurance companies need to consider the major factors in setting/revising their dividend payout policy as profitability creates more cash inflow potential, to be competent in the arena the company’s growth opportunity needs to be considered, as dividend is the only means of return from investment and government should provide an option for shareholders in the absence of secondary stock market. On the same token investor need to consider the significant factors profitability, leverage, growth opportunity, GDP and inflation in their investment decisions on Ethiopian insurance companies
DETERMINANTS OF INTERNAL CONTROL SYSTEM: A STUDY ON SELECTED COMMERCIAL BANKS IN ETHIOPIA
(wolkite university, 2021-03-09) LAKECH ERCHAFO MADEBO
Internal controlling systems are the mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud. The purpose of this study is to examine determinants of effective internal control system in selected commercial banks in Ethiopia. The descrptive reseaarch design was used and the mixed research approach was used to collect data; while, questionnaires used to collect primary data. The survey was taken commercial banks through random sampling techniques 120 employees for empirical examination. The data was analyzed by using statistical package SPSS version 21 and descriptive and econometrics tool OLS; All independent variables (POER, WOC, IND, GOR, WIECM and WEDOS) were 59% explained the dependent variables (ICS). The study revealed that there existed significant and positive relationships between the Remuneration of internal control staff (β =0.397 prob. = 0.000), organizational structure (β =0.429 prob. = 0.000) and independency of IC staffs (β =0.130 prob. = 0.018) with internal control system. On the other hand, enforcement control (β =-0.379 prob. = 0.000) have a negative and statistically significant relationship with internal control system. However, workers competency (β =0.042 prob. = 0.624), Early report presentation (β =-0.049 prob. = 0.564) have positive relation but not significant effect on internal control system. Based on the findings of the study the banks management emphasize on the role of remuneration internal control staff because of a key to controlling system. This study provides useful information to practitioners and academics who are interested in identifying the determinants of internal control system.
CORPORATE GOVERNANCE AND ITS IMPACT ON PERFORMANCE (SOCIAL AND FINANCIAL): EVIDENCE FROM MFIs IN ETHIOPIA
(wolkite university, 2021-03-09) SANI NISRANE MOHAMMED
The study was aimed to look at the effect of corporate governance attributes on the social and financial performance of in MFIs Ethiopia. Explanatory research design with quantitative research approach was employed to carry out the study. From 35 legally registered microfinance institutions at NBE and AEMFIs, 16MFIs were selected based on the availability of data to investigate the effect of corporate governance variables such as board size, board educational qualification, board experience in the financial sector, meeting frequency of the board, board audit committee size and CEO with dual responsibility on social (breath of outreach and depth of outreach) and financial performance of MFIs measured by Number of Active Borrowers, Gross Loan Portfolio and Return on Asset respectively. In addition to main explanatory variables, control variables MFIs Size were also included within the study variables. Both primary and secondary data were used in which primary data regarding board characteristics was collected through questionnaire and secondary data was obtained from MFIs, NBE and AEMFIs. Panel data covering six year from 2014-2019 was analyzed for sixteen microfinance institutions. The regression results revealed that board size, board educational qualification, meeting frequency and CEO with dual responsibility have positive relationship with financial performance of MFIs while board experience in the financial sector, board audit committee size and firm size has statistically negative relationship. Board educational qualification, meeting frequency, audit committee size and firm size have positive relationship with social (breath of outreach) while board size, board experience in the financial sector, and CEO with dual responsibility have negative relationship. Board size, Board educational qualification, audit committee size and firm size have positive relationship with social (depth of outreach) while board experience in the financial sector, meeting frequency and CEO with dual responsibility have negative relationship. Based on empirical result of the study, it is recommended that CEO with dual responsibility should be separate for better performance. Furthermore, in order to reduce the problem of management failures which put at risk the money obtained from the public and other sources, the governance mechanisms of MFIs have to be effective (i.e. creating and maintaining a business environment that motivates managers and entrepreneurs to maximize firm’s operational efficiency, returns on investment and or on equity and long term productivity).
THE EFFECT OF BOARD DIRECTORS COMPOSITIONS PRACTICES ON FINNANCIAL INNOVATION ON ETHIOPIAN COMMERCIAL BANKS
(wolkite university, 2021-04-07) MUSLIHA MUSTEFA UMER
One of the many challenges the business world is facing currently is installing sound and proper board directors composition in an organization. This might lead to economic failure if not managed and addressed properly and timely. This study aims at evaluating the effect of board director’s compositions practices on financial innovation on Ethiopian commercial banks using five years data from the year 2016 to 2020. The study assessed the effect of corporate governance variables on financial innovation of Ethiopian commercial banks as measured by natural logarithm of e- banking products and services. To achieve the objectives of the study the researcher used descriptive research design. The Corporate governance variables used in this study were females representing in the board, educational qualification of board of directors, board size, audit committee size and board meeting frequency. In the study firm size and bank age were used as control variables. Mixed research approach was employed to understand the effect of corporate governance on financial innovation on Ethiopian commercial banks. The study uses both primary and secondary source of data. Primary data was collected through interview of board secretaries of Ethiopian commercial banks used in this study. The study used panel data and pooled regression model to analyze the relationship between corporate governance mechanisms and financial innovation using a data set of 15 Ethiopian commercial banks. The findings showed that, females representing in the board and educational qualification of board directors have positive and significant effect on financial innovation of the banks. On the other hand, audit committee size and board directors meeting had negative and significant effect on financial innovation of the banks. Based on the findings of the study, it can be concluded that female’s directors in the board, educational qualification of board of directors, audit committee size and board directors meeting frequency influence financial innovation of Ethiopian commercial banks. Thus, the study recommends commercial banks should improve their board director’s educational qualification by providing the chance to upgrade their academic status and increases the size of female’s board directors to enhance financial innovation in the banks.