Owner-Manager Duality and Formal Credit Participation among Formal Firms in Ghana: Does External Financial Audit Moderate the Relationship

Abstract

Concentrating ownership and executive control in one person may either strengthen a firm through unified leadership or weaken its credit position through limited oversight and information opacity. External financial audit may reduce these concerns by increasing the credibility of financial statements. This study examined whether owner-manager duality was associated with current formal credit participation among formal firms in Ghana and whether external financial audit moderated that relationship. This study analyzed the Ghana World Bank Enterprise Survey 2023. Formal credit participation was coded as one when an establishment held a loan, a line of credit, or both from a financial institution. Owner-manager duality indicated that the largest owner was also the top manager. External audit indicated that an external auditor checked and certified the previous fiscal year’s financial statements. After removing World Bank nonresponse codes and incomplete control variables, the analytical sample contained 689 establishments. Survey-weighted logistic regression controlled for logged firm age, employment size, realised industry and region. Hierarchical models, average predicted probabilities, legal-form controls, alternative survey weights, an expanded credit measure, influence tests, cross-validation and 1,000 stratified bootstrap replications were used. Weighted estimates indicated that 21.9% of firms held current formal credit, 83.6% had owner-manager duality, and 68.0% had externally audited financial statements. In the additive model, duality had a positive but narrowly nonsignificant association with credit, adjusted odds ratio = 1.67, 95% confidence interval [0.97, 2.88], p = .065. External audit was not independently significant. In the full interaction model, the duality odds ratio among unaudited firms was 1.63, 95% confidence interval [0.55, 4.82], p = .377. The audit odds ratio among non-duality firms was 1.11, 95% confidence interval [0.35, 3.57], p = .856. The duality-by-audit interaction was essentially null, adjusted odds ratio = 1.03, 95% confidence interval [0.30, 3.60], p = .959. Adjusted credit probabilities ranged from 15.0% for unaudited non-duality firms to 23.9% for audited duality firms, but the probability-scale interaction was not significant. The moderation hypothesis was not supported in any major robustness analysis. The findings suggest that external audit and owner-manager leadership were not sufficient, by themselves or jointly, to explain current formal credit participation. Firm scale and the broader lending context appear more important.

Keywords: Owner-manager duality, external audit, formal credit, SME finance, corporate governance, Ghana

DOI: 10.7176/EJBM/18-9-06

Publication date: September 30^th 2026