Abstract
AbstractThis study seeks to examine the influence of firm-specific determinants of stock prices in an emerging market with particular reference to firms listed on the Ghana Stock Exchange. The study employs a data-set from all listed firms on the Ghana Stock Exchange from 2008 to 2014. The study used panel regression analysis to analyse the data. In general, the study found that accounting information, specifically earning per share, return on equity, book value and market capitalization of the firms, is relevant in explaining stock prices after the adoption of International Financial Reporting Standards (IFRS) in Ghana. This study contributes to the ongoing debate on the firm-specific factors influencing share price in an emerging market with particular reference to Ghana Stock Exchange. It is recommended that the Directors of the firms listed on the Ghana Stock Exchange introduce policies which would have a positive impact on their return on equity and earnings per share to significantly influence their...
Highlights
The literature defines value relevance as the ability of accounting data to summarize and capture information that affects the market value of companies
The current study extends this line of enquiry into an emerging market, Ghana Stock Exchange, to examine the effect of firm-specific information on the market price of stock after the adoption of International Financial Reporting Standards (IFRS)
The empirical findings revealed a positive and significant relationship between ROE, earning per share (EPS), BMVS and market capitalization suggesting that these variables are major determinants of the market price of shares on the Ghana Stock Exchange
Summary
The literature defines value relevance as the ability of accounting data to summarize and capture information that affects the market value of companies. The ability of financial statement information to capture or summarize information that affects share values is referred to as value relevance. In this case, prices of equity are used as the proxy for the value of a company. Their study instituted the tradition of empirical capital market research in accounting that continues to this day. They were the first to provide convincing scientific evidence that firms’ share returns respond to the information content of their financial statement. Several studies have been conducted to test the relationship that accounting information bears to stock prices
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