Drivers of shareholder value: evidence from an emerging market

In the ever-competitive capital market, value creation is vital to a firm's ability to attract and maintain investment funds. To this end, it is important that the factors that drive shareholder value are identified and consistently emphasised. Drawing from the shareholder theory, this paper attempts to identify factors that strongly drive shareholder value of non-financial firms listed on the Ghana Stock Exchange during the period 2007 to 2017. Fixed-effect regression model is used in the study to estimate the relationship between various drivers identified in the extant literature and shareholder returns. The empirical result shows fixed capital investment, earnings per share, and return on equity are the main drivers of shareholder value among the sampled firms. They have a statistically significant and positive effect on shareholder value. Sales growth, operating margin, and free cash flow are not significantly associated with shareholder value. The study controls for interest expenses, firm size and age. This study is the first to examine the main drivers of shareholder returns on the GSE. In relevance, the study provides both managers and investors with useful signals about the factors that matter most in shareholder value creation, especially from the perspective of an emerging market.