Firm-specific determinants of stock prices in an emerging capital market: Evidence from Ghana Stock Exchange

Figures & data

Table 1. Variables and their description

Symbol	Description	Expected sign
MPS	Market price of share as at 31st December each year
EPS	Earnings per share	+
DS	Dividend per share	+
DY	Dividend yield	−
BVS	Book value of a share	+
ROE	Return on equity	+
LEV	Leverage of the firm	−
SIZE (LnMaCap)	Market capitalization	+

Table 2. Panel unit root test – Im, Pesaran and Shin (IPS)

Variable	Level	First order difference
EPS	−0.91881 (0.9134)	−3.41107*** (0.0000)
DS	−1.41785 (0.5855)	−3.18335*** (0.0001)
DY	−2.04370 (0.8992)	−2.45102** (0.0167)
BMVS	−2.00984 (0.1268)	−2.97749*** (0.0004)
ROE	−1.41774 (0.5854)	−3.18347*** (0.0001)
LEV	−2.04361 (0.8981)	−2.45103** (0.0167)
SIZE (LnMaCap)	−2.00774 (0.1268)	−2.97638*** (0.0002)

** Indicates level of significance at 5%.

*** Indicates level of significance at 1%.

Table 3. Descriptive statistics of variables

Variable	Mean	Standard deviation	Minimum	Maximum
MPS	2.204	12.872	0.026	17.360
EPS	1.334	0.958	0.000	2.989
DS	0.235	0.024	0.000	0.128
DY	0.058	4.325	0.000	11.328
BMVS	6.348	5.938	0.8147	9.789
ROE	0.456	0.2845	0.000	0.792
LEV	0.578	0.129	0.320	0.920
SIZE (LnMaCap)	2.942	1.230	0.324	3.458

Table 4. Correlation matrix for the variables

Variables	MPS	EPS	DS	DY	BMVS	ROE	LEV	SIZE
MPS	1.000
EPS	0.167	1.000
DS	0.492	0.134	1.000
DY	0.320	0.345	0.440	1.000
BMVS	0.334	0.257	0.254	0.345	1.000
ROE	0.047	0.201	0.028	0.247	0.078	1.000
LEV	0.285	0.368	0.125	0.430	0.245	0.423	1.000
SIZE (LnMaCap)	0.087	0.049	0.236	0.048	0.402	0.044	0.433	1.000

Table 5. Results of the pool OLS regression

Variables	POLS
	Coefficient	t-statistics
EPS	9.240***	3.678
DS	−0.362	−0.072
DY	−4.861***	−7.621
BVS	0.967***	4.868
ROE	1.302***	3.418
LEV	−0.144	−0.278
SIZE (LnMaCap)	0.128***	2.978
Constant	−0.956	−3.272
R^2	0.745
F-Test p-Value	0.000

Source: The coefficient (t-statistics) for the variables EPS, BVS, RoE and LnMaCap is 9.240 (3.675), 0.967 (4.868), 1.302 (3.418) and 0.128 (2.978), respectively, at 1%. Thus, the alternative hypothesis is accepted in favour of the null hypothesis for these variables. This has documented a positive effect for these variables on share price. The finding is consistent with results from Irfan and Nishat (2002), Khan, Aamir, Qayyum, Nasir, and Khan (2011), as well as Okafor and Mgbame (2011).

*** Indicates level of significance at 1%.

Irfan, C. M., & Nishat, M. (2002). Key fundamental factors and long-run price Changesin an emerging market – A case study of karachi stock exchange (KSE). The Pakistan Development Review, 41, 517–533.

 Google Scholar

Khan, K. I., Aamir, M., Qayyum, A., Nasir, A., & Khan, M. I. (2011). Can dividend decisions affect the stock prices: A case of dividend paying companies of KSE. Journal of Finance and Economics, 76, 67–74.

 Google Scholar

Okafor, C. A., & Mgbame, C. O. (2011). Dividend policy and share price volatility in Nigeria. Jorind, 9, 202–210.

 Google Scholar