| dc.description.abstract | The relationship between information flow and asset prices behaviour is a key topic in
finance. In this project, the ojective was to investigate the effects of political events on
the stock market performance at the Nairobi Securities Exchange (NSE). In particular, the
study examined whether political-related events mainly the national general elections and
their results contain information regarding the changes in prices and volatility at the
NSE.Several theories were applied and used to bring out the issue of information flow
and stock price volatility. The study was based on a political variable (general elections)
event study methodology to establish the behavior of the NSE performance around the
sample period, 1997 to 2013. The population of this study comprised of all the firms
trading at the NSE in the above period. As per the records at the Nairobi Securities
Exchange, there were 61companies listed by March 2013. The period studied cut across
beginning the second election held in Kenya under the multiparty rule in 1997, first
regime change of 2002, the turbulent election period of 2007 and a second regime change
election event of 2013. The study found that the NSE 20 share index exhibited
seasonality over the months from the year 1997 to 2013. The findings concluded that
market reaction to elections is highly negative or positive depending on the election being
analysed. The information content in the general election is therefore useful for valuing
the securities in the markets.These findings have important implications for the optimal
strategies of risk-averse stock market investors. | en_US |
