Investor reactions to news about firms listed on the Ghana Stock Exchange

The Ghana Stock Exchange has received a lot of attention in recent years. Some research done concerning the GSE conclude that the market is inefficient. Behavioural Finance has been used to explain the aggregate stock market, highlighting irrational decision making. Directly related to the field of Behavioural Finance, this research presents a study into how individual investors react to news on the GSE and the reasons why they react in the ways they do. A descriptive study was done, using interviews and open-ended questionnaires to gather data from individual stock owners as well as some brokerage houses. It was found out that the response to new information on the GSE is fairly rapid. Findings showed that investors react more rapidly to negative news than to positive news. The type of information that respondents admit would cause them to withdraw their investments are mainly news of fraud and financial distress. However, some investors are immune to news, because of the issue of single-sided market orders which makes it difficult for them to react to news and trade the way they want. It is recommended that brokerage houses, investments banking firms and entrepreneurs take advantage of the insufficient or non-existence of market makers, provide such services and help make the stock market more liquid.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, June 2016
Ghana, Ghana Stock Exchange, behavioral finance, stock market, investors