The effect of financial performance announcement on share returns of firms listed at the nairobi securities exchange
Abstract
Corporate events have numerous effects on the stock market and it has been observed that
share price movements is an area of research that has attracted the attention of various
researchers, Firms listed in the security markets are required by law to communicate
periodically their financial performance to stakeholders through financial
announcements. However, efficient markets immediately absorb and reflect the new
information into the share prices. This paper examines the effect of financial performance
announcement on share returns of firms listed at the Nairobi securities exchange by
analyzing daily share prices and market returns for the period between 2010 and 2013,
using the event study methodology, secondary data was collected and analyzed using the
market model.
The results obtained indicate that the average abnormal returns were not significant at 5%
probability level. Thus the NSE is of semi-strong efficiency, whereby it is not possible to
earn abnormal returns in the NSE using the publicly available information.
Citation
Master of Business AdministrationPublisher
University of Nairobi