Debt Financing, Information Sharing, and Profitability: Evidence from Listed Firms from an Emerging Economy

Jephthah Owusu Osei, Emmanuel Sarpong-Kumankoma and Joshua Yindenaba Abor

Journal of African Business, 2024, vol. 25, issue 3, 409-426

Abstract: This study investigates how credit information sharing conditions debt financing to boost the profitability of 20 listed enterprises on the Ghana Stock Exchange between 2003 and 2013. We employ robust least squares and simultaneous bootstrapping models in a panel setting. Our findings show that the impact of debt financing on profitability increases when it is subject to information sharing and takes the shape of short, long, and total debts. In the worst-case situation, contingent debt financing reduces the negative impact of debt financing on profitability. Therefore, authorities must adopt laws and legislation that deepen, widen, and strengthen credit information sharing to offset the negative impact of information asymmetry on loan financing and business profitability.

Date: 2024
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DOI: 10.1080/15228916.2023.2209356

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