The Impact of Capital Gains Taxation on the Prices of Ordinary Shares of Selected Enterprises in the Nairobi Stock Exchange

Abstract

This study aimed at determining whether he introduction of capital gains tax had any impact on the prices of ordinary shares on the Nairobi Stock Exchange. I also aimed at establishing the trend if any, of prices on the Nairobi Stock Exchange from 1973 to 1983, a period characterized by different economic situations in the country . The study was of interest because of the resentment which faced capital gains tax since its introduction in Kenya on the allegations that it disturbed the Stock Exchange Market . Indices of ordinary share prices were computed and were analysed as a time series through tabular and graphic methods on annual , monthly and weekly basis. It was found that ordinary share prices on the Nairobi Stock Exchange exhibited a significant trend between 1973 and 1983 which was downward between 1973 - 1975 , upward between 1970 - 1978 and downward again from 1979 - 1983 . The prices reached their highest levels in 1978 and their lowest in 1975 ...............................................................