| dc.description.abstract | The study was conducted with the objective of investigating the effects of Modified Audit
Opinions on share prices.
A survey was carried out on 49 companies that were continuously listed at the Nairobi Stock
Exchange during the period of study. The data collected was on audit opinions, daily share
prices, closing share prices, average weekly share prices, shares outstanding and book value of
equity. The data collected was analyzed using descriptive statistics, correlation analysis,
ANOVA and regression analysis. The mean and standard deviation were calculated and
compared for closing share prices, book value of equity, shares outstanding and weekly average
share prices. Correlation analysis was done to determine the strength of the linear relationships
between the audit opinions and the closing share prices, shares outstanding, book value of equity and average weekly share prices.
The findings of the study revealed that there is a very weak negative relationship between audit
opinions and share prices and that the audit opinion only accounted for a very small percentage
of the change in share prices. The ANOVA results indicated that these results were statistically
insignificant and varied with the different dependent variables.
Based on these research findings, it was concluded that there is a weak negative relationship
between audit opinions and share prices. The study recommends the strengthening of the
regulatory role of ICPAK to ensure that audit reports that are released to the public are devoid of
collusion between company management and auditors. The study also recommends that CMA
should make it mandatory for all quoted companies to file interim audit reports during the
financial year so that this information is reflected in share prices in a timely manner. | en |
