Nexus between Accounting Information and Stock Market Return: The Mediating Effect of Board Size of Listed Non-Financial Entities in Ghana

Abstract

The study examined the association between accounting information and stock market return with board size as a mediating effect of listed non-financial entities in Ghana. The population of the study was 27 listed non-financial entities from 2007-2019 with 251 firm-year observations. This study applied a panel regression model that takes unobserved individual heterogeneity and distributional heterogeneity into consideration. In addition, the study employed cross-section dependence test; Levin-Lin-Chu, ImPesaran, Pesaran, Kao and Larsson cointegration test; fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS); and Panel Dumitrescu and Hurlin heterogeneous panel granger causality test. The results of unit root test showed that all the variables are integrated at first. Moreover, the results of cointegration test revealed that accounting information variables were cointegrated in the long run. The result of FMOLS and DOLS further revealed that all the accounting information variables with the exception of OCFPS have a direct insignificant relationship with the stock market return of listed non-financial entities. The study revealed that board size strenghthens the association between OCFPS, EPS and PER, and stock market return at 5% significant level under FMOLS of listed non-financial entities. The pairewise granger causality test highlighted bidirectional causal relationship between the accounting information variables and stock market return listed non-financial entities.

Keywords: Accounting Information, Corporate Governance, Stock Market Return, Board Size

DOI: 10.7176/RJFA/13-22-02

Publication date: November 30^th 2022