A study into growth and firms’ financial performance: Evidence from the Ghana Stock Exchange (GSE)
Mohammed Musah, Yusheng Kong, Stephen Kwadwo Antwi, Mary Donkor, Prince Ewudzie Quansah, Anthony Frank Obeng
This study sought to examine the relationship between growth and the financial performance of non-financial firms listed on the Ghana Stock Exchange (GSE). Specifically, the study sought to; establish the association between growth and the firms’ financial performance as measured by ROA; explore the connection between growth and the firms’ financial performance as measured by ROE; and to determine the link between growth and the firms’ financial performance as measured by ROCE. Panel data extracted from the audited and published annual reports of fifteen (15) non-financial firms for the period 2008 to 2017 was used for the study. The Pearson Product-Moment Correlation Coefficient technique of data analysis was employed to assess the bivariate associations between growth and the firms’ financial performance, and from the results, growth had a significantly positive connection with the firms’ financial performance as measured by ROA. However, an insignificantly positive affiliation between growth and the firms’ ROE and an insignificantly negative relationship between growth and the firms’ ROCE were also established at α=5%. The positive associations between growth and the firms’ ROA and ROE is an indication that, an increase in growth led to an increase in the firms’ financial performance. Therefore, determinants of firms’ growth like, size; innovation; age; solvency; leverage; operational efficiency; profitability; liquidity; inflation; economic growth (GDP); exchange rate; interest rate; product diversification; market share expansion; business location; price competition; market demand forces; government policies; and labour regulations among others, should be properly taken into consideration by the sampled firms and all other establishments operating in the Ghanaian business environment.