EFFECT OF FREE FLOAT ON EARNINGS PER SHARE OF LISTED NON-FINANCIAL FIRMS IN SUB-SAHARA AFRICA

Abstract

This study examines the effect of free float on earnings per share (EPS) of listed non-financial firms in Sub-Saharan Africa. The motivation for the study stems from the growing emphasis on ownership structure reforms in emerging capital markets and the need to understand how the proportion of publicly tradable shares influences corporate profitability. The study employs an Ordinary Least Squares (OLS) regression technique to analyze the relationship between free float and EPS, while also controlling for foreign ownership, institutional ownership, and managerial ownership. The model results reveal that free float has a statistically significant negative effect on EPS, indicating that higher levels of publicly tradable shares may reduce earnings performance in listed non-financial firms within the region. Among the control variables, managerial ownership also shows a significant negative effect, while foreign ownership and institutional ownership are statistically insignificant. The model explains approximately 16% of the variation in EPS, suggesting that other firm-specific and macroeconomic factors also influence earnings performance. The study concludes that although free float enhances market participation and liquidity, excessive dispersion of ownership may negatively affect profitability. It is therefore recommended that firms and regulators adopt an optimal ownership structure that balances liquidity with effective corporate control to enhance earnings performance in Sub-Saharan Africa.