Influence of Corporate Sustainability on Share Prices of Listed Companies in the Nairobi Securities Exchange

Abstract

The intense corporate competition coupled with increased investor awareness and focus on ethical and environmental good has permeated the financial and capital markets in the last three decades. Corporate sustainability focuses on increasing a firm’s survival into the future by balancing the three objectives of economic, social and environmental wellbeing. The study sought to determine the effect of corporate sustainability on the market share price of listed companies on the Nairobi securities exchange broken down into four specific research objective; to determine economic success effect on share prices of listed companies, to establish product stewardship’s effect on share prices of firms, to determine the effect of corporate citizenship on prices of shares of firms and to examine the environmental stewardship effect on prices of shares. The study adopted a descriptive survey design in order to have a deeper view into the relationships and the effects of corporate sustainability on the market share price among firms listed on the Nairobi securities exchange. Target population comprised all the 64 firms listed on the NSE categorized into nine groups. The study took a census of all the NSE 20 share indexed companies. Only secondary data from published sustainability reports, financial reports from company websites and those obtainable from the CMA were used. The researcher made use of secondary data collection template. Based on regression analysis, the study revealed that all the variables were significant in affecting market share price of the firms. The F statistics was 0.168 at p<0.05, 0.395 and 0.49 respectively at p˂0.05. All variables were used in the final model. The study was restricted to the assessment of the effect of the corporate sustainability on market share price. This calls for replication of a study of the same nature in other functional and related public sector organizations and a comparison made on the dependability of the findings on service delivery on these public organizations. The study was also limited by the sample size since only 20 firms were studied. This therefore creates a need of replication inorder to covet the entire listed firms on the NSE. Based on the study findings, the researcher recommends an intense adoption and implementation of sustainability initiaves by firms which would translate to favourable corporate sustainability and hence influence growth a firm’s Market price per share