The impact of foreign exchange risk exposure on financial performance of manufacturing firms listed on the ghana stock exchange
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Date
2023
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KNUST
Abstract
The depreciation of cedis has been a long-studied subject in literature with inconsistent results and explanations. In this analysis, we compare ROA, ROE, and Tobin's Q to determine a company's success. Using data from 2005-2018, this research examined how changes in the exchange rate affected the profitability of Ghana's manufacturing sector. A combination of the panel technique and an ex-post facto research strategy allowed for the compilation of this study's findings. Likewise, the panel regression model was estimated using the GLS method, which considered both homoscedasticity and autocorrelation. The findings indicated that the exchange rate had a negative and statistically significant effect on the return on investment (ROI) of manufacturing companies. Second, expansion boosts profitability (as measured by ROA and Tobin's Q). Third, the data demonstrate that a firm's tangibility has a deleterious effect on its value (as measured by Tobin's Q). The research finds that the exchange rate affects company performance significantly at the macroeconomic level.
Description
A thesis submitted to the department of accounting and finance college of humanities and social sciences in partial fulfilment of the requirements for the master of science in accounting and finance