Impact of Financial Structure on the Financial Performance of Selected Listed Consumer Goods Manufacturers: A Panel Data Study of Listed Companies on the Ghana Stock Exchange

Abstract

This study examines the impact of capital structure and liquidity management on the financial performance of listed manufacturing companies in Ghana, using panel data analysis spanning several fiscal years. Rooted in established financial theories, including trade-off theory, pecking order theory, and signaling theory, the research investigates how leverage, equity composition, and liquidity ratios influence key performance indicators such as return on equity (ROE), return on assets (ROA), earnings per share (EPS), and profit margin (PM). The study is based on data from a representative sample of manufacturing companies listed on the Ghana Stock Exchange and employs fixed and random effects regression models to analyze the dynamic relationships between the variables. The findings reveal that an overreliance on debt financing has a negative and statistically significant effect on profitability, reinforcing the idea that emerging market companies should adopt conservative debt policies. Liquidity, on the other hand, demonstrates a positive and significant impact on financial performance, indicating the crucial role of effective working capital management. Although the asset structure shows a positive relationship, it is not statistically significant in explaining the variations in profitability. The study provides both theoretical and practical contributions, emphasizing the importance of financial flexibility and strategic liquidity management to enhance enterprise value. It offers valuable information to corporate managers, investors, and policymakers on how to optimize capital structure decisions in resource-constrained environments. Ultimately, the research underscores the need for context-specific financial strategies that align with local economic conditions and institutional frameworks.