| dc.description.abstract | Macroeconomic variables are a major determinant of the economic well being of any country
as they affect many facets such as Gross Domestic Product (GDP), balance of trade and
currency interactions. In Kenya, there have been no studies specifically related to the effects
of macroeconomic variables on share prices of companies listed at Nairobi Securities
Exchange (NSE).
The present study analyses the share price performance of seven firms and seeks to identify
the factors that influence share prices for the selected firms in various sectors at NSE by
developing a model (s) for share price determination.
Data was collected on the seven variables under study for a period of five years (2008 – 2012)
and regression analysis was utilized to determine the effect of selected macroeconomic
variables on the share prices of seven companies in seven sectors at NSE and the share prices
for the companies were analyzed in terms of change in magnitude.
The general results indicate that there is no one model to predict share prices at NSE. Only
one company, Equity Bank, had a model that could be used to determine share prices based
on the variables under study and this could be explained by the fact that the share prices of
Equity Bank had a big differential (of KShs 312.15) with the highest price at KShs 324.00 and
the lowest price at KShs 11.85 while the share prices of the other companies under study had
small differentials with the biggest differential being KShs 54.25.
The results of the empirical analysis are consistent with most of the findings in the literature
review and support the evidence that the selected determinants have little effect on share
price. This could have been influenced by the period under study (five years) and maybe with
a longer time period the results could be different. This is further evinced by the results of the
regression of Equity Bank share prices which had a big differential denoting that in the long
run, as prices change, a model could be developed. | en |
