Effects of cross border listing announcements on stock price performance at the Nairobi securities exchange
Rotich, Trizah C
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The globalization of financial markets has resulted in an increasing number of firms choosing to cross list their stock on exchanges outside their domestic market. Academic discourse continue to investigate whether cross listing events have any effects on various managerial aspects of the firm inclusing investment returns, firm value and firm performance. In east Africa Community, the firms can cross list in four organized exchanges namely the NSE, DSE, USE and RSE. This study sought to determine the effect of cross border listing announcements on stock price performance at the Nairobi Securities Exchange. The event study methodology was applied on sixteen cross listing events with a 60 day event window. 30 days pre announcement and 30 days post announcement. The study finds that the abnormal and cumulative abnormal returns off the cross listed firms behave differently over the event window. Of the sixteen events, in only one event does the abnormal and cumulative abnormal returns have a significant p value suggesting that the event affects the returns. This is 6.25% of the overall events as identified in non parametric tests. Of the other fifteen events representing 93.75% of the events, there is no significance. The study recommends that EAC countries should harmonize cross listing policies, further integtration initiatives to avoid arbitrage gains. Further studies are suggested on the same area using a sectoral approach and applying robust techniques.
University of Nairobi