Effects of Share Pricing on Firms’ Performance in Ghana

Abstract

This study is designed to examine the effects of share pricing on firm‘s performance. Net profit earnings of the firm was used as the dependent variable for the study whilst the independent variables constituted some characteristic indicators that can affect the firm’s performance such as earnings per share, return on equity, return on assets, return on investments and overheads. Five listed companies namely; the Ghana Commercial Bank, Enterprise Insurance, Mechanical Lloyd, Aluworks Ghana Limited and Standard Chartered Bank were used for the study. A random model was used to test for the effects of the various variables on firm‘s performance using a panel data. The results show that earning per share was significant and positive in explaining firm’s performance whilst return on investment and overheads were significant but negative in explaining firm‘s performance. Return on assets and return on equity were however, insignificant in explaining firm’s performance. it is therefore recommended that firms trade on the stock exchange to attract more shareholders through their share pricing as this will enable them to increase their capital gain as well as the public patronizing not only in their shares but also being part of them and hence patronizing their products since they will have a stake in it.