Does Board Size Mediate the Relationship Between Accounting Information and Stock Market Return? Evidence From Listed Financial Firms in Ghana

Abstract

The study examined the relationship between accounting information and stock market returns of listed financial entities on the Ghana Stock Exchange using board size as a mediating variable. The population of the study was 13 listed financial entities from 2007-2019 with 169 firm-year observations. This study applied a panel regression model that takes unobserved individual heterogeneity and distributional heterogeneity into consideration. In addition, the study employed cross-section dependence test; Levin-Lin-Chu (LLC), ImPesaran, Pesaran, Kao, and Larsson cointegration test; Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Square (DOLS). The results of the unit root test showed that all the variables were integrated at first difference. Moreover, the results of cointegration test revealed that accounting information variables were cointegrated in the long run. The result of FMOLS and DOLS revealed that all the accounting information variables with the exception of operating cash flow per share (OCFPS) and net tangible assets (NTA) have a direct insignificant relationship with the stock market return of listed financial entities. The study revealed that board size strengthens the relationship between OCFPS and NTA, and stock market return at 5% significant level under FMOLS and DOLS of listed financial entities.