Effects of Cross-listing on Stock Returns: a Survey of Cross Listed Companies in Kenya

Abstract

The Kenyan market is an interesting research setting because, despite being a developing economy, gains are still expected from cross listing with its relatively 'poor' neighboring economies (Uganda, Tanzania, Rwanda and Burundi) (Dediti, 2008). Currently, Kenya Commercial Bank. Kenya Airways, Jubilee Insurance and East Africa Breweries are also listed at the Tanzania, Uganda and Rwanda stock markets. Equity bank is also listed in Kenya and Uganda. Besides making shares of the companies accessible across the region, the regional listings have been mainly driven by market considerations. Yet, studies on Kenyan firms’ cross listing activity are relatively scarce even though Kenya is the giant economy in the East African Region. The population of the study consisted of the five (5) companies that are cross listed. These five companies are: East African Breweries Ltd (EABL), Kenya Airways (KQ), Kenya Commercial Bank. Jubilee Insurance and Equity Bank. The study tracked its financial performance two years before and three years after cross listing. The data has been analyzed using descriptive and inferential statistics being .Ratios have been mainly used to determine their performances before and after cross listing. Such Key performance indicators included Liquidity ratios, leverage ratios asset ratios, turnover ratios moan others. Inferential statistics included test of significance of the null hypothesis.