Changes In Share Prices As Predictors Of Accounting Earnings
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Date
2003-10Author
Kamuruci, Benjamin
Type
ThesisLanguage
enMetadata
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This study examines the predictability of accounting earnings using changes in share
prices of companies listed at the Nairobi Stock Exchange during the 1996 to 2001 period.
From data obtained at the Nairobi Stock Exchange, yearly changes in accounting
earnings were calculated for all the companies. Weekly changes in prices of shares were
also calculated for these companies and then a summary of total positive changes, total
negative changes and total zero changes for each of the companies was done.
Out of between 43 to 53 companies for the six year period, empirical results do indicate
that share prices have a predicting ability on the accounting earnings. Results were
obtained for companies which had positive changes in share prices being followed by
either positive or negative changes in accounting earnings and also for those with
negative changes in share prices being followed by either negative or positive changes in
accounting earnings.
The results shows that, on average about 60.38 % of the companies had their share prices
moving in the same direction with accounting earnings. These findings are consistent
with common findings in literature (Forster 1984) that share prices can predict accounting
earnings
Citation
Masters of Business Administration (2003)Publisher
University of Nairobi Faculty of Commerce