Fundamental Variables and Stock Returns: Evidence from the Ghana Stock Market

This study presents evidence from the first decade of the Ghana Stock Exchange on the usefulness of fundamental accounting variables in predicting stock performance. Significant year-to-year relationships between individual variables and dividend adjusted annual returns were not prevalent, but significant positive stable relationships with returns were found for net profit margin and sales per share/share price, while there was a significant negative stable relationship between returns and beta. A combination of variables also significantly explained return variations. Given the exhange's short life, few listed companies, and high interest rates, the study highlights both the importance and limitations of accounting information in an emerging capital market.