Title: Abnormal managerial discretionary spending and investment efficiency of South African firms: does board governance quality matter?

Authors: Sulaiman Ademola Oreshile

Addresses: Department of Insurance, Lagos State University, Lagos, Nigeria

Abstract: This study examines the effect of abnormal managerial discretionary spending (AbMgr_disexp) on investment efficiency (Invest_eff.) and the role of board governance quality (BGQ) as a moderator on the relationship. Utilising least squares dummy variable (LSDV) two-way fixed effect estimator, the analysis covers panel data from non-financial publicly listed firms on the Johannesburg Stock Exchange from 2015-2023. The finding indicates that AbMgr_disexp degrades Invest_eff. while BGQ improves Invest_eff. Additionally, BGQ mitigates the effect of AbMgr_disexp on Invest_eff. Results are robust across alternative measures of AbMgr_disexp and Invest_eff., firm heterogeneous analysis, and endogeneity tests using two-stage least squares (2SLS) and generalised method of moments (GMM) regression estimators. These findings are valuable to investors and policymakers, highlighting the influence of CEOs' decisions such AbMgr_disexp and relevance of strengthening BGQ on investment performance in South Africa and Sub-Saharan Africa (SSA) at large.

Keywords: abnormal managerial discretionary spending; board governance quality; investment efficiency; South Africa.

DOI: 10.1504/AAJFA.2026.154705

Afro-Asian Journal of Finance and Accounting, 2026 Vol.16 No.4, pp.482 - 510

Received: 28 Oct 2024
Accepted: 14 May 2025
Published online: 10 Jul 2026 *

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