EFFECT OF MANAGERIAL OWNERSHIP ON PRICE-TO-EARNINGS RATIO OF LISTED NON-FINANCIAL FIRMS IN SUB-SAHARAN AFRICA

Abstract

Managerial ownership has become an important concept in corporate governance and financial economics, particularly in explaining firm value and market performance. Despite its relevance, managerial ownership and price-to-earnings ratio of listed non-financial firms in sub Saharan Africa are multifaceted and interdependent, posing significant challenges, narrowing focus and limiting the generalizability of the findings across the diverse economic environments for analysis and understanding. The study therefore examined the managerial ownership on price-to-earnings ratio of listed non-financial firms in Sub-Saharan Africa. The study adopted an ex-post facto research design where panel data for a period of 10 years were collected from the financial statements of the listed non-financial firms from eleven (11) sub-Saharan African countries. Panel Regression Analysis was used, to examine the extent to which managerial ownership affects price-to-earnings ratio of listed non-financial firms in Sub-Saharan Africa The result of panel regression analysis showed that managerial ownerships affect price to earnings ratio positively and statistically significant (p < 0.01), Foreign ownership (FO) exhibits a positive but statistically insignificant (p = 0.887), Institutional ownership (IO) also shows a positive but insignificant effect on the price-to-earnings ratio (p = 0.908). The study concluded managerial ownership has positive and significant effects on the price-to-earnings ratio of the listed non-financial firms in sub Saharan Africa. The study therefore recommended that periodic reporting and dividend policies of key ownership components should be implemented to enable investors to make informed decisions.