The impact of COVID-19 on stock returns of listed firms on the stock market: Ghana's experience

PurposeIn Ghana, even though scholars and experts in the field of economics and finance have expressed their opinions and perceptions on the effect of the pandemic on the Ghana Stock Exchange, there has been no study conducted to that effect. This study, therefore, aimed at examining the impact of COVID-19 on the stock returns on the Ghana stock exchange. This would help policy makers and investors in making efficient decisions.Design/methodology/approachThe outbreak of the novel COVID-19 has been a thorn in the flesh of the world in its entirety, affecting many aspects of life including the stock market. This study, therefore, examined the impact of the outbreak on the stock returns of the Ghana Stock Exchange. The study utilized data from the All Share Prices of the Ghana stock exchange, commonly known as the Ghana stoke exchange composite index (GSECI) for analysis. The data covered the period before the outbreak of COVID-19 and during the outbreak. It was revealed that the Ghana stock exchange experienced better returns on the market before the outbreak of the virus. The outbreak of COVID-19 has led to wide variations in the market increasing the risk of investments. The exponential General Autoregressive Conditional Heteroscedasticity (EGARCH) (1, 1) model also reveals that the outbreak of COVID-19 has a significant negative effect on the returns in the market. The market in these periods of COVID-19 is highly volatile. It is recommended that investors should carefully consider risk mitigation strategies to enable them diversify their investments effectively and efficiently against the high risk associated with the market in this COVID-19 era.FindingsIt was revealed that the Ghana stock exchange experienced better returns on the market before the outbreak of the virus. The outbreak of COVID-19 has led to wide variations in the market increasing the risk of investments. The EGARCH (1, 1) model also revealed that the outbreak of COVID-19 had a significant negative effect on stock returns in the market. The market during these periods of COVID-19 was viewed as highly volatile.Research limitations/implicationsThe outbreak of COVID-19 is hence deduced to have a negative impact on the Ghana stock exchange. However, the knowledge of how the market has been affected by the disease, it is important that financial risk mitigation studies be undertaken. This goes beyond what this study has done. The study can further be expanded to include other important economic variables such as GDP, inflation, exchange rates and the likes in to the model.Practical implicationsInvestors should carefully consider risk mitigation strategies to enable them diversify their investments effectively and efficiently against the high risk associated with the market in this COVID-19 era.Social implicationsIt is also important that investors consider diversification of their investments in order to reduce the risk in their investments. It will be more appropriate for most investors to invest with companies such as banks and the telecommunications companies listed on the on the market. This is because most of the telecommunication companies in these times have taken advantage and are making good profit on their businesses. Likewise, some of the financial institutions are considered essential institution in these times. Investing in industries such as manufacturing and the oil and gas sector may be more risky.Originality/valueThe decline in economic and financial market indicators could be credited to the failure of most business entities, organizations and firms which are struggling to sustain their operations in these times of COVID-19. These also include firms listed on the Ghana stock exchange with whom investors transact their daily businesses. However, about 70% of the Ghanaian economy heavily depends on these business and firms found in the private and informal sector. According to the Ghana Statistics Service COVID-19 Business Tracker Survey, about 131,000 businesses expressed their uncertainties with the business environment and also faced the challenge of financial accessibility. The study is appropriate to unearth the true effect and offer policy interventions.

Corporate Social Responsibility and Organizational Performance: Mediating Role of Employee Job Satisfaction

The study assesses the relationship between corporate social responsibility (CSR) and organizational performance of the companies listed on Ghana Stock Exchange (GSE). It further investigates the mediating effects of employee satisfaction on the relationship between CSR and OP. The survey data was collected from 246 responses, comprising junior and senior staff, senior level managers who are in charge of the day-to-day running of the companies and they are in the position to provide adequate and sufficient information with regards to the companies. A SmartPLS (version 3.2.3) was used to analyse the data. The findings of the study show that CSR activities significantly and positively influence organizational performance. This influence is found to be pronounced especially when CSR activities are deliberately exercised toward internal stakeholders. A positive relationship was found between CSR and ESAT, while ESAT also influence OP positively.

The Impact of Firm Performance on Annual Report Readability

This paper attempts to find the impact of firm performance on annual report readability. This study consists of 15 listed firms on the Ghana Stock Exchange within the period 2008 to 2017. The study applies Gunning Fog Index to measure annual report readability and measures Firm Performance using Return on Assets (ROA) by applying the fixed and random effect method. Per the Hausman test, the random effect method was accepted; the result stated that firm performance positively relates to annual report readability. In addition, the study finds out that corporate governance exerted a negative influence on the readability of the annual report. Finally, the study adopts F-MOLS to test Robustness. Regulators can consider improving and writing plain disclosure laws to improve annual report readability.

Assessing portfolio and asset returns of some financial and non- financial companies on the Ghana stock exchange using a 3-factor model

This study on the Ghana Stock Exchange (GSE), investigated, if the overall size of the market, affects the fundamentals of the Fama French 3-Factor model, and to ascertain if the Fama French model can be used effectively to assess portfolio and assets return for companies listed on the Ghana Stock Exchange. In this paper, portfolios of assets of companies on the Ghana Stock Exchange are constructed and analyzed using the Fama-French 3-factor model. The empirical data which consists of assets of 15 companies listed on the GSE, including assets of both financial and non-financial companies for good representation of the Ghana Stock Exchange. We found that the basic principle of the model is not satisfied. This is attributed to a number of factors which include overall size of the market, volume of trade, and high leverage (more debt than equity) associated with financial firms. High debt/equity ratio is linked to high risk. Keywords: Market Capitalization, Book-to-market ratio, Portfolio, Small minus big, High minus low

Effect of Interest Rate on Stock Prices in Ghana

The paper assesses the effect of interest rate on stock prices, with emphases on Ghana Stock Exchange; using monthly time series data from July 2007 to December 2019. The Augmented Dickey-Fuller (ADF) test was employed to establish the stationarity properties of the data or otherwise. Using the Ordinary Least Squares (OLS) estimation technique of Multiple Regression, the results (? = – 0.891, p < 0.05) revealed an indirect association between interest rates and stock prices in the Ghanaian context; which is consistent with the theoretical conclusion that an increase in interest rate results in a decrease in stock prices. Thus, in the light of this finding, it was recommended that policymakers should consider the stock market dynamics due to the significant relationship that exists between the two macroeconomic variables.

Behavioral factors affecting investment decision-making in bank stocks on the Ghana stock exchange

Purpose The finance literature is awash with papers bordering on the classical assumption that investors are rational in their decision-making, and hence, would always take decisions rationally given the right information, thus making the stock market efficient. This assumption has, however, been found to be at least inadequate given the fact that investors are complex psychological beings full of emotions. This paper aims to investigate the psychological factors that tend to influence the decisions of investors. Design/methodology/approach The study used a questionnaire to survey a total of 350 investors holding stocks of listed banks on the Ghana Stock Exchange (GSE). Findings The study found the existence of various behavioural biases among the investors surveyed. The most dominant factor or bias found to be influencing investment decisions of respondents was herding with nearly 62% weight. Again, biases such as regret aversion and gambler’s fallacy were also found to strongly influence the decisions of investors, along with mental accounting, overconfidence and anchoring. Practical implications The presence of these behavioural biases, therefore suggests that investors do not always take rational decisions, and hence, making the stock market efficient and that as psychological beings, their investment decisions are impacted strongly by their psychology. Originality/value The study used a questionnaire to survey a total of 350 investors holding stocks of listed banks on the GSE with a special focus on overconfidence, anchoring, herding, gambler’s fallacy, mental accounting and regret aversion as the variables of interest, the first of its kind in Ghana.

ACCRUAL EARNINGS MANAGEMENT, REAL EARNINGS MANAGEMENT AND FIRM PERFORMANCE: A PANEL DATA ANALYSIS

This research purposely looks into earnings management and how it relates to firm performance. By attempt of gaining empirical results, we proxy firm performance by return on assets (ROA)and return on equity (ROE) as dependent variables. We respectively model discretionary accruals and abnormal cash flow from operations as independent variables supported by firm size, leverage, and liquidity as control variables. Panel analysis was adopted to test a sample of 14 non-financial listed on the Ghana Stock Exchange from 2008 to 2019. We find that firms use both accrual earnings and real earnings methods to manage earnings. Results further indicate firms employ the efficient concept of earnings management to facilitate positive firm performance. Our analysis shows that companies with future acquisition prospects can use earnings management to boost financial efficiency. Although we find evidence of a positive relationship between EM and firm performance, we encourage authorities and facilitators to implement rules requiring transparent financial information to mitigate misleading results and reduce managers discretion. Prospective investors must also perform an in depth review of financial records prior to investing. Finally, our research has added to the body of expertise on earnings management, which positively impacts firm performance. KEYWORDS: Earnings Management, Sales Manipulation, Ghana Stock Exchange, Firm Performance.