The Effects of Covid-19 Pandemic on Stock Performance for Firms Listed at the Nairobi Securities Exchange
Abstract
This study sought to determine the effect of Covid-19 pandemic on stock performances. In
determining the effect, the research considered other variables. The control variables are
exchange rates, stock trade volumes and the days to 2019 dividends book closure. The study
adopted a quantitative approach where quantitative data was collected and analyzed through
regression. The study used the natural logarithm of share prices to represent stock performance
and the number of company shares traded in a day to represent share trade volume. Number of
days to 2019 dividends was used to measure the effect of dividends declaration on share prices
while real exchange rates were used to measure exchange rates. The effect of COVOD 19 was
measured by number of days since the first case was announced. The data was collected for 30
days since the first case was announced and eliminated weekends as the market closes for the
weekend. The study results have indicated that except for the exchange rates, the other
variables under study affected share performance negatively. For a unit increase in COVID 19
effect, stock performance reduced by 0.203 while for a unit increase in trade volume, it reduced
by 0.136 units. The study also established that for a unit increase in days to 2019 (last trading
period) dividends, there was a decrease in stock performance by 0.998, which was the highest
absolute effect. In exchange rates, a unit increase in exchange rates increased stock
performance by 0.036, which was the lowest absolute effect. Except for the exchange rates, all
other variables had a significant effect on stock performance as measured by their p-values.
The p-values were 0.000 for both trade volume and days to 2019 dividends but 0.042 for effect
of COVID 19 pandemic. The insignificant exchange rate p-value was 0.592. The four variables
were found to be responsible for up to 32.36% of the changes in stock performance. This shows
that there are other factors, which account for the remaining 67.64% of the changes in stock
performance. The study findings are adequate to advice on key matters relating to stock
performance. The results are helpful to investors and other interested stakeholders like policy
makers and researchers. Using the results, policy makers will be able to develop well-informed
policies on reducing effects of pandemics on stock performance and help cushion investors in
the NSE. This will also make NSE a safe market to deal with.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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