English

Abstract

  The paper documents the monitoring effect of corporate disclosure and transparency on cash holdings on the Ghana Stock Exchange (GSE). The paper employs the Fama and French (1998) valuation model by relating firm level variables to firm value with panel data covering a period from 2002 to 2007 for 23 firms. It builds further on the agency theory and its relevance to emerging markets. We find that the relationship between corporate disclosure, transparency and cash holdings is economically significant and inversely related. We provide that a 1% increase in the composite disclosure and transparency index decreases cash holding by 0.0338 with the market also discounting the value of such firms by 0.0522. Additionally, we provide that firm size, profitability, financial leverage and investment needs are economically significant determinants of cash holdings.  The sample refers to only Ghana and the extent of generation of the findings could be affected. We argue that further research should be carried out using other country data to confirm or contradict our findings. The paper includes implications for the management of cash resources on the GSE and builds on the mechanism of aligning the interest of shareholders with managers. It further provides implications for the development of the capital market in Ghana and argues that further research should be carried out using other country data to confirm or contradict our findings   Key words: Corporate disclosure, transparency, cash holdings, emerging market, Ghana.