An Investigation Into the Reverse Stock Splits at the Nairobi Securities Exchange, Kenya
Abstract
This study investigates the need for introducing reverse stock splits at the Nairobi
Securities exchange , Kenya. As most companies at the NSE have relatively large
number of outstanding shares or their share prices are relatively low, the research tries to
find out if the introduction of reverse splits would be welcomed by the managers of the
vurious companies listed at the NSE.
An e ploratory research design was used and data was collected from fifty two managers
by use of a questionnaire. This methodology was used because little information is
known about reverse stock splits in Kenya and hence the findings would be useful for
future analysis and generation of hypotheses. A chi-square test was then carried out to
analyze the data.
The findings reveal that there are many advantages associated with reverse stock splits
but they do not outweigh its disadvantages. However, managers would recommend their
companies to reverse split so as to attract institutional investors and hence, they support
the case for the introduction of reverse stock splits in Kenya.
This would mean that the various institutions like the Capital Markets Authority and the
Nairobi Securities Exchange responsible for regulating the securities market hold
advocate for legislation that would allow the introduction of reverse stock split and
hence formulate policies that will go em the process .
Publisher
University of Nairobi
Subject
Reverse stock splitsRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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