A Panel Data Analysis of the Interactions between Lagged Profitability and Firms’ Financial Performance: Evidence from the Ghana Stock Exchange GSE

This study sought to examine the association between lagged profitability and the financial performance of non-financial firms listed on the Ghana Stock Exchange (GSE).Specifically, the study sought to explore the relationship between lagged profitability and the firms' financial performance as measured by ROA; assess the association between lagged profitability and the firms' financial performance as measured by ROE; and to examine the affiliation between lagged profitability and the firms' financial performance as measured by ROCE.Panel data extracted from the audited and published annual reports of fifteen (15) non-financial firms for the period 2008 to 2017 was used for the study.From the study's Pearson Product-Moment Correlation Coefficient estimates, an insignificantly positive association between lagged profitability and the firms' ROA and ROE was established.Also, an insignificantly negative affiliation between lagged profitability and the firms' ROCE was discovered at the 95% confidence interval.Even though the association between lagged profitability and the firms' financial performance was not statistically significant, the positive connection uncovered between lagged profitability and the firms' ROA and ROE is an indication that significant increases in lagged profitability could have led to significant increases in ROA or ROE and vice-versa.Therefore, the determinants of firms' financial performance like liquidity, leverage, capital structure, operational efficiency, size, growth, tangibility, age, inflation, economic growth (GDP), exchange rate, interest rate, competition, corporate taxes and market share among others, should be properly factored into the business decisions of the firms.