dc.contributor.author | Mukora, Mary Yvonne W | |
dc.date.accessioned | 2014-12-30T13:05:41Z | |
dc.date.available | 2014-12-30T13:05:41Z | |
dc.date.issued | 2014 | |
dc.identifier.uri | http://hdl.handle.net/11295/78606 | |
dc.description | Thesis Master of Science in Finance | en_US |
dc.description.abstract | In an ideal world, dividend announcement would have no impact on the shareholder’s value. In
the real world however dividend announcement is often followed by changes in the market prices
of stocks. Empirical studies show mixed evidence about the relationship between dividend
announcement and stock returns. The objective of this study was to determine the effect of
dividend announcement on stock returns of firms listed at the Nairobi Securities Exchange. The
event study methodology was used with a 61-day event window, 30 days before the dividend
announcement date and 30 days after the announcement date and day 0 being the dividend
announcement date. Out of a population of 61 companies listed at the Nairobi Securities
Exchange, a sample of five commercial banks was chosen. The analysis was conducted for a
period of five years. The abnormal returns were calculated by subtracting the expected returns
from the daily returns and adding the dividend payment announced during the period for each of
the days after announcement. The cumulative average returns were then calculated by summing
daily abnormal returns before and after the announcement. A graph of the average abnormal
returns and the cumulative average abnormal returns for the period was then plotted for each of
the years to show the trend of abnormal returns over the event window. The average abnormal
returns were observed to be negative before the announcement date and positive after the
announcement date for all the years. The graph for the cumulative average abnormal returns
sloped downwards before the announcement date and sloped upwards after the announcement
date for all the years. The graph for the average abnormal returns fluctuated for all the years. The
test of significance was conducted for both the average abnormal returns and the cumulative
average abnormal returns. The null hypothesis that dividend announcement does not have an
effect of stock returns of firms listed at the Nairobi securities Exchange was rejected. This led to
a conclusion that dividend announcement had a positive effect on stock returns for firms listed at
the Nairobi Securities Exchange. The study therefore recommends that more firms should
consider distributing dividends since there is a positive effect on the stock returns | en_US |
dc.language.iso | en | en_US |
dc.publisher | University of Nairobi | en_US |
dc.subject | Dividend | en_US |
dc.subject | Stock returns | en_US |
dc.subject | Nairobi Securities Exchange | en_US |
dc.title | The effect of dividend announcement on stock returns of firms listed at the Nairobi Securities Exchange | en_US |
dc.type | Other | en_US |
dc.type.material | en_US | en_US |