Applicability of Identified Financial Determinants of Undiversifiable Risk to Emerging Markets: A Multi-Sector Analysis of Non-Financial Listed Companies on the Ghana Stock Exchange
Kwami Hope Quao *
Wenzhou-Kean University, China
*Author to whom correspondence should be addressed.
Abstract
Aim: This study explores the influence of financial variables on undiversifiable risk in emerging markets.
Methodology: Eight financial variables are examined as determinants of systematic risk. Five years financial data, 2016-2020, of 14 multi-sector non-financial firms listed on Ghana Stock Exchange was used. A descriptive, regression analysis and multicollinearity analysis was performed to arrive at the study results.
Results: Results based on the five years of financial data indicated that liquidity, leverage, operating efficiency, dividend payout and market value of equity have negative relationship while profitability, firm size and growth have positive relationship with systematic risk.
Conclusion: Except for profitability and growth, the significant relation of the other variables to beta shows that both investors and managers can utilize their movements to make sound financial decisions that will enhance value.
Keywords: Systematic risk (Beta), financial variables, Ghana securities exchange