Determinants of Share Price of Listed Firms in Ghana

The price of a company’s share represents investors’ confidence in the future profitability of the company and also used to represent the value of shareholders’ wealth The study examined factors that influence share price of firms listed on the Ghana stock Exchange. The study specifically examined firm specific factors, book ratios and macroeconomic factors that influence share price of listed firms in Ghana. The firm-specific variables include firm size and the firm being a financial institution. The book ratios used in the study include earnings per share, debt ratio, return on assets, return on equity and dividend per share. The macroeconomic variables include economic growth, inflation rate and interest rate. The study sampled 21 firms over a 10-year period, from 2009 to 2018. The study used descriptive statistics, correlation analysis and panel regression analysis to achieve the objectives of the study. The results of the study show that firm-specific variables such as firm size and the firm being financial institution were positive and statistically significant determinants of share price of listed firms in Ghana. The book ratios of debt to asset ratio, return on asset and return on equity were statistically insignificant association with share price of firms listed on the Ghana Stock Exchange. Other book ratios, such as earnings per share and dividend per share, were positively associated and statistically significant with share price of the sampled firms listed on the Ghana Stock Exchange. On the macroeconomic variables, only economic growth was positively associated with share price and statistically significant at 10% significance level. The other variables – inflation and interest rate – were statistically insignificant. The results show that book or investment ratios are the main determinants of share price for firms listed on the Ghana Stock Exchange.