Corporate Governance and Stock Returns Variability: A Study of Ghanaian listed firms

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Date
AUGUST, 2015
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Abstract
This research bridges the gap in the literature in Ghana by finding out the effect of corporate governance on stock returns variability of companies listed on the Ghana stock exchange. The literature on corporate governance research in Ghana dwells on aspects like corporate governance and firms‟ performance; corporate governance and financing decisions and others. However, a research is yet to be done to find out the influence and its extent of corporate governance on stock returns variability. Investors are not only interested in the accounting and market-based performance measures such as return -on -assets, return-on-equity and Tobin‟s q but investors are also concerned about the unpredictable variations in returns they face for holding equity shares. The research thus focuses on the unsystematic risk or idiosyncratic risk listed companies on the Ghana stock exchange face as a result of corporate governance. The research uses 28 companies listed on the Ghana stock exchange over the period 2004-2013 using panel data regression. The research reveals that corporate governance variables such as board size, presence of outside directors on boards, concentration of shareholding increase companies‟ unsystematic risk. Interestingly, firms audited by the big four audit firms experience more variability in stock returns than companies audited by small audit firms. Most companies listed on the Ghana stock exchange have the CEO and board chairman positions separated but this step does not have any significant influence on stock returns variability. Management ownership is not prevalent among companies on the Ghana stock exchange and the research reveals that management ownership has no significant influence on stock returns variability
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A thesis submitted to School of Business (department of accounting and finance) in partial fulfillment of the requirement for the award of Mphil finance degree. School of Business.
Keywords
Corporate governance, stock returns variability, Ghana
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