The effect of seasoned equity offerings on stock performance of commercial banks in Kenya
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Date
2015Author
Wainaina, Domisian M
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The objective of this study was to establish the effect of seasoned equity offerings on
stock performance of commercial banks in Kenya. The study used a descriptive
research design. A census targeting the commercial banks that made seasoned equity
offering between 2008 and 2014 was conducted. The study used secondary data
obtained from the Nairobi Securities Exchange. Data was collected for the eight
commercial banks that conducted seasoned equity offering on the NSE. Event study
methodology was used to evaluate the effect of seasoning on stock performance.
Simple linear regression was used to develop return models over the preannouncement
period. Abnormal returns were calculated as the difference between
the actual returns and estimated returns over the post announcement period of forty
days. The study found that the cumulative average abnormal returns were negative.
The average abnormal return was also negative. The result of t-test indicated that the
average abnormal return were not statistically different from zero. It was concluded
that equity seasoning does not have a significant effect on commercial banks stock
performance in Kenya. The study recommended that investors in banking stocks
would not earn abnormal returns following seasoning by commercial banks. Further
research may investigate the effect of seasoning on stock performance by considering
companies that made no other announcement simultaneous to seasoning. They may
also evaluate the effect of seasoning on volatility of returns
Publisher
University of Nairobi