The effect of past returns on the current trading at the Nairobi securities exchange
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Date
2013-11Author
Maina Philip, M
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Investor overconfidence has been proposed to explain various anomalous findings in
security markets. The theory of investor overconfidence provides testable implication
assuming investor overestimation of their abilities and private information and biased
self-attribution. High (low) trading activity following market gains (losses) present on of
the testable implication among others. The study sought to find out whether past returns
have an effect on the trading volume at the NSE.
The objective of the study was to find out how past returns influence trading activity. The
population of the study was the 62 companies listed in the NSE. The companies in the 20
share index were considered as an appropriate sample for the study due to their
representativeness. The weekly index and volume was obtained from the Nairobi
Securities Exchange (NSE) official website and was analyzed through simple linear
regression.
Inconsistent with overconfidence hypothesis prediction, the findings indicated an
insignificant relationship between past returns and trading volume. Based on the findings
the study recommends that future studies use a longer period of time for analysis and also
to analyze different sectors and indices separately. The major limitation of the study was
in the method of analysis since some other variable(s)is (are) causing the variation on the
dependent variable.
Citation
Master Of Business Administration (mba), School Of Business, University Of Nairobi,2013Publisher
University of Nairobi, School of business,