dc.description.abstract | This Research Project examined the effect of lockup expiration on the stock prices of companies
listed on the Nairobi Securities Exchange. The population of this study consisted of all sixty four
companies listed on the Nairobi Securities Exchange. The study used purposive sampling
method where companies that were listed on the NSE after 2002 when the Capital Markets
Public Offer Listing and Disclosure Regulations of May 2002 which makes lockup contracts for
a period of two years mandatory for IPO companies listed on the NSE came into effect. A total
of five firms which cuts across five industries: The banking Industry, Insurance Industry, Energy
Industry, Commercial and Services Industry and Technology and Telecommunications Industry,
out of the sixty four listed companies were used as a sample. The study period was from 2008 to
2013. The secondary data for the five variables used was obtained from NSE information data
base for the period 2008 to 2013
This Study used event study methodology to establish the relationship between lockup expiration
and stock prices of IPO companies listed on the Nairobi Securities Exchange. The study sought
to establish the abnormal return around the lockup expiration, additionally, the study investigated
the statistically significant factors affecting the cumulative abnormal returns surrounding the
lockup expiry period consisting of log of firm size, Firm age and ownership concentration.
The results show statistically significant negative abnormal returns at lockup expiration. The
general results therefore indicate a negative relationship between lockup expiration and stock
prices of companies listed on the Nairobi Securities Exchange. In terms of the results of the three
independent variables: Log of firm size, firm age and ownership concentration used to
investigate the statistically significant factors affecting the cumulative abnormal returns the study
found that these independent variables have statistically insignificant effect on the cumulative
abnormal returns for the sample considered in this study. | en_US |