Effect of the day of the week on stock prices of listed agricultural firms at the nairobi securities exchange

Abstract

The agricultural establishments registered at the NSE have been experiencing variation in stock prices at the NSE. Despite majority of the listed firms in the agricultural sector displaying very high stock prices, the firms have showed falling stock prices in the last five years compared to firms from other sectors. The evidence of the effects of days in a week anomaly in the stock markets with the effect being empirically inconclusive. This investigation sought to determine the day of the week (DOTW) influence on stock prices of listed agriculture firms in Kenya. This investigation utilized descriptive research design. The target population was seven agricultural establishments registered at the NSE in the year 2019. Secondary data for the daily stock prices from 1st January 2019 to 31st December 2019 for each of the 5 days of the week was used. Average monthly data was utilized in this investigation. The data was sourced by a data collection schedule. Descriptive statistics and linear regression were utilized for analysis. The research employed dummy variable regression to establish the DOTW effect. The significance of the investigation was tested with F-test. The investigation found that Monday had the lowest stock prices among the listed agricultural firms in Kenya for the period between January and December 2019. Wednesday showed the highest stock price of listed firms in Kenya. Thursday was the most volatile day for agricultural stock prices at the NSE. The investigation recommends that the investors to avoid basing their investment on the DOTW. Nairobi security exchange ought to undertake an investigation to ascertain why Monday had the lowest stock price compared to other days. It ought to similarly establish why Thursday had the greatest volatility of the market. Though the Wednesday stock price effect is not significant, investors can consider selling their shares on the day to maximize returns through high prices. The investigation was limited by the size of the population where agricultural firms are few. Monthly data was used to increase the data points. secondary data are also general and tends to be historical. Most current data were used (2019). This investigation recommends a similar investigation using other listed firms like manufacturing firms to establish whether there is a DOTW effect on the share prices of quoted establishments.