Determinants of cross sectional variation of equity returns of companies quoted in the Nairobi Stock Exchange
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Awareness of cross-sectional return variation is useful in dealing with matters such as the value of diversification, the potential rewards from individual issue selection and risk of being wrong in favourable market environments. The implication is that it matters greatly which issues an investor holds. For investors who choose not to emphasize issue selection in their investment policy, diversification is critical. For those who do attempt to pick stocks, the rewards can be very high, but the risks and negative consequences of poor selections may be substantial. The factors affecting such equity returns are thus fundamental in these selections. The study is presented in five chapters through which the researcher has tried to discuss the above issues. Data used was exclusively secondary from the Nairobi Stock Exchange and was analysed using SPSS version 17. From the study, a number of challenges were established. The findings of the study should be understood and evaluated in light of the limitations of the study. Suggestions for further research are also given.