| dc.description.abstract | Stakeholders use amongst other measures, stock prices to gauge performances of firms,
and consequently, performances of management. The study aimed at establishing the
relationship between changes in price and change in management at the Nairobi
Securities Exchange. The study further aimed at establishing the nature of such
relationship if any. Studies establishing relationship between changes in stock prices in
developed countries gave conflicting results. Similar studies conducted in Kenya, a
developing country with unique set of operating environmental factors did not adequately
address the aspect of relationship between changes in price and change in management at
the Nairobi Securities Exchange and hence the need for study in this area. Out of a total
of 54 companies listed on the Nairobi Securities Exchange as at 2nd January 2001, a
sample of 37 companies met the criteria for inclusion. Data relating to persistent changes
in stock prices and changes in the management was collected from Nairobi Securities
Exchange, Capital Market Authority and financial reports of firms. A longitudinal study
was used to evaluate the relationship between changes in stock prices and change in
management at the Nairobi Securities Exchange. A logistic regression model was used to
explain the relationshi p between a dichotomous response variable (change in
management) and a categorical predictor variable (stock price). The Wald Test was used
to test the significance of the relationship between changes in price and change in
management. The study showed that the relationship between changes in price and
change in management was significant. Further the study showed that a unit fall in stock
price increased the log odds (logit), the odds and the probability of change in
management. Conversely, a unit rise in stock price decreased the log odds (logit), the
odds and the probability of change in management. The study concluded that a
relationship between change in stock prices and change in management existed in the
Kenyan market, that is, the Nairobi Securities Exchange and that the relationship was an
inverse relationship. The study recommends that Nairobi Securities Exchange and Capital
Market Authority put in place mechanisms to ensure data accessibility, that reasons for
varied reactions time wise to changes in stock price by different firms be analyzed and
that Nairobi Securities Exchange and Capital Market Authority compel firms to give
reasons for all management changes carried out at anyone particular time. The study
suggests further studies to investigate causes of changes in management in cases where
stock prices do not change as well as investigate if time is a significant variable in
explaining change in management | en_US |
