The effect of investor profile and trust on stock market efficiency: Evidence from the Ghana Stock Exchange (GSE)

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The Ghana Stock Exchange (GSE) is described as infant and immature but has seen improvements over the last decade. Nevertheless trust remains a big challenge to the GSE. Lack of trust if not checked might affect the GSE adversely. It could lead to a reduction in the numbers of listed firms, few stock trading, and hamper effective participation of individual investors. This research therefore seeks to find out how the kind of people who invest and the level of trust they have for the GSE affects the efficiency of the stock market. Using extensive data from questionnaires distributed to individual investors on the GSE, this study analyzes and tests the sign of the relationship between investor profile and trust on stock market efficiency. The dataset includes responses from the individual investors who answered questions about themselves and the GSE. The relationship is tested using empirical methods. The study showed that the relationship between investor profile and trust is positive but it is only trust that is statistically significant, supporting the view that stock market efficiency in Ghana can be associated with trust levels of the investor. The paper ends by recommending stepping up awareness campaigns and encouraging cross border listings to help boost activities on the GSE.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2014
Ghana, Ghana Stock Exchange (GSE), market efficiency, investor profile, stock markets