Effect Of Financial Statement Information On Stock Returns Of Firms Listed At The Nairobi Securities Exchange
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Date
2019Author
Kagiri, Francis Kimani
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Accounting information mitigates information asymmetries which brings about
adverse selection during transactions in the capital market. It also boosts liquidity; this
minimizes discounts that firms are forced to issue capital. Accounting information is
regarded as the most powerful resource utilized by investors, since investment
decisions are made on account of the firm’s stock and price which is reflective of the
firm’s future profit. The study was set out to establish the effect of financial statement
information on stock returns of firms quoted at the NSE. A descriptive research
design was employed to detect the association between variables in all listed firms
that had been operational between the years 2014 and 2018. Data collected was
analyzed using quantitative data analysis methods whereby inferential statistics:
regression and correlation analysis were used. All the study parameters (stock prices,
earnings management, ROE, cashflows and dividends) recorded an upward trend
during the research period. Research concluded of an existence of a significant
connection amid financial statement information and stock prices. Dividends was
significantly associated to stock prices while cashflows, earnings management and
profitability were insignificantly linked to stock prices. Output from correlation
established of an existence of a moderately strong correlation among dividends and
stock prices. Similarly, a weak correlation was realized among cashflows and stock
prices. There was non-existence of a correlation among earnings management and
profits with stock prices. Overall regression model adopted by the researcher was
found to be significant since p-value (0.000) was smaller than 5 per cent. Coefficient
of determination was found to be 48.1%, which signaled that the regression equation
was an adequate fit for the data. Research recommends the need for the government to
strengthen its supervision of listed firms to ensure a true disclosure of financial
statement. The main shortcoming of this study is that, the researcher has solely relied
on secondary data which is historical in nature, and prone to manipulation, this could
easily have impacted negatively on the quality of the research findings because this
kind of data is easily manipulatable. Another limitation for this study is the time
frame. Five years is not adequate to establish a clear relationship between variables. A
longer duration of time like 15-20 years can enable the researcher to establish more
accurate and reliable research findings.
Publisher
UoN
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Business [1411]
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