The Stock Market and the Financing of Corporate Growth in Africa: The Case of Ghana

September 1, 2006

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Charles Amo Yartey. The Stock Market and the Financing of Corporate Growth in Africa: The Case of Ghana, (USA: International Monetary Fund, 2006) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the corporate financing pattern in Ghana. In particular, it investigates whether Singh's theoretically anomalous findings that developing country firms make considerably more use of external finance and new equity issues than developed country firms to finance asset growth hold in the case of Ghana. Replicating Singh's methodology, our results show that compared with corporations in advanced countries, the average listed Ghanaian firm finances its growth of total assets mainly from short-term debt. The stock market, however, is the most important source of long-term finance for listed Ghanaian firms. Overall, the evidence in this paper suggests that the stock market is a surprisingly important source of finance for funding corporate growth and that stock market development in Ghana has been important.

Subject: Business enterprises, Corporate finance, Corporate sector, Economic sectors, Financial institutions, Financial markets, Stock markets, Stocks

Keywords: Accounts methodology, Africa, Assets growth, Bank financing, Business enterprises, Company account, Corporate finance, Corporate growth, Corporate sector, Debt equity ratio, Equity finance, Equity issue, Financing pattern, Ghana, Investment decision, Long-term debt, Mauritian firm, Retained earnings, Stock markets, Stocks, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/201
Stock No:

WPIEA2006201
ISBN:

9781451864618
ISSN:

1018-5941

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