The Effect of Profit Warning Announcements on Share Price Movement for Firms Listed at the Nairobi Securities Exchange

Abstract

The study’s main purpose was to establish the effects of profits warnings on stock price movement at the Nairobi Stock Exchange. The research blends quantitative and qualitative data to provide you with relevant and accurate information. For the research purpose, the population involved 24 companies over the period 2018 to 2020. The study relied on NSE's daily market reports, news media websites and secondary data from stockbrokers This data was collected from publicly traded publicly traded financial statements, the NSE website and the Capital Markets Authority website. Secondary data from the NSE database on daily prices and company news and data published on the internet and in print media were used. The data was analyzed using an event methodology. The findings revealed that profit warnings announcements have an unfavorable effect on stock returns since 75% of the expected and actual returns of the companies declined preceding the announcement. The implication of profit warning announcements on abnormal, standardized cumulative abnormal and cumulative normal returns largely depend on the firm issuing the announcement. The returns demonstrate huge variations throughout the event period.