The Effect Of Managerial Ownership On Stock Performance Of Firms Listed At The Nairobi Securities Exchange

Abstract

This research had the objective of determining the effect of managerial ownership on stock performance for the companies listed at the NSE. Sixty five firms listed at the NSE for the year ending December 2015 formed the population for this research and it was a census. The use of secondary data was employed and data was obtained largely from the NSE Handbook 2015-2016 together company websites and the CMA website. The evaluation of managerial ownership’s effect on stock performance was done using regression analysis. The coefficient of managerial ownership was found to be positive which showed that there existed a relationship that is positive of managerial ownership on the performance of stock. However the relationship was found to be insignificant since the results revealed a p value that was low. This means that a low percentage change in stock performance was explained by variation in managerial ownership. Shareholders may thus consider share ownership plans as a mitigating effort towards dealing with agency conflicts. Further studies are needed however because this is an area that has limited empirical evidence locally. Also further studies may seek to study firms that have women board members to see how the stock performance differs with those of firms that have all men boards.