Corporate Strategy and Firm performance: Case for the Multinational Banks in Sub Saharan Africa

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Kibs Boaz Muhanguzi
Kibs Boaz Muhanguzi
1 Kyambogo University

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Various studies have empirically examined the effect of corporate strategy on firm performance but not to the level of this paper’s methodological scope regarding time, geographic, and variable constructs. For external validity of research findings, this paper uses a more modern estimation procedure-the system Generalized Method of Moments GMM, on a panel data (2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017) for the multinational banks in sub-Saharan Africa. Relevant corporate strategy constructs for firms with multinational operations are adopted. These are; diversification, debt, and equity financing which are examined in relation to firm’s performance as measured by return on assets ROA. One provoking question motivating this inquiry is: Does it profit a firm to have operations in many countries when financing is by debt, and or equity? Such corporate strategies are expected to have positive returns. Findings however, show that unlike debt financing strategy, geographical diversification and equity financing positively affect the banks’ ROA. Therefore, investors and corporate manager should design their strategic plans from which the best strategies for implementation can be selected. Particularly,corporate decisions on questions about the bank’s where to go, and the source of funds for investment should keenly be addressed during strategic planning.

Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

Kibs Boaz Muhanguzi. 2019. \u201cCorporate Strategy and Firm performance: Case for the Multinational Banks in Sub Saharan Africa\u201d. Global Journal of Human-Social Science - E: Economics GJHSS-E Volume 19 (GJHSS Volume 19 Issue E2): .

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GJHSS Volume 19 Issue E2
Pg. 29- 36
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Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

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GJHSS-E Classification: FOR Code: 149999
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v1.2

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March 19, 2019

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English

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Various studies have empirically examined the effect of corporate strategy on firm performance but not to the level of this paper’s methodological scope regarding time, geographic, and variable constructs. For external validity of research findings, this paper uses a more modern estimation procedure-the system Generalized Method of Moments GMM, on a panel data (2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017) for the multinational banks in sub-Saharan Africa. Relevant corporate strategy constructs for firms with multinational operations are adopted. These are; diversification, debt, and equity financing which are examined in relation to firm’s performance as measured by return on assets ROA. One provoking question motivating this inquiry is: Does it profit a firm to have operations in many countries when financing is by debt, and or equity? Such corporate strategies are expected to have positive returns. Findings however, show that unlike debt financing strategy, geographical diversification and equity financing positively affect the banks’ ROA. Therefore, investors and corporate manager should design their strategic plans from which the best strategies for implementation can be selected. Particularly,corporate decisions on questions about the bank’s where to go, and the source of funds for investment should keenly be addressed during strategic planning.

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Corporate Strategy and Firm performance: Case for the Multinational Banks in Sub Saharan Africa

Kibs Boaz Muhanguzi
Kibs Boaz Muhanguzi Kyambogo University

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