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Effects of Use of Derivatives on Financial Performance of Companies Listed in the Nairobi Security Exchange

Author

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  • Luyali Newton Chanzu
  • Mouni Gekara

Abstract

This study investigated the effects of use of derivatives on financial performance of companies listed in the Nairobi Securities Exchange (NSE). The objectives were; to determine how risk management, efficiency, price stabilization and price discovery in derivatives affect the financial performance of companies in NSE. This study targeted 11 companies that are listed in the NSE trading in the derivative market. Questionnaire was used to collect data from finance officers of the 11 companies listed and NSE officers. The data collected was analyzed by use of descriptive and inferential statistics. Qualitative responses were analyzed using content analysis. A correlation analysis was carried out to determine the performance of the companies listed in the NSE during the pre- and post- adoption of the financial derivatives by these companies. The findings indicated that apart from price stabilization other variables contributed positively to the financial performance of companies listed in NSE.

Suggested Citation

  • Luyali Newton Chanzu & Mouni Gekara, 2014. "Effects of Use of Derivatives on Financial Performance of Companies Listed in the Nairobi Security Exchange," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(4), pages 27-43, October.
    • Handle: RePEc:hur:ijaraf:v:4:y:2014:i:4:p:27-43
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    Citations

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    Cited by:

    1. S Manjushree, 2020. "A Derivative is a Risk Hedging Tool from Investor Perspective," Shanlax International Journal of Commerce, Shanlax Journals, vol. 8(3), pages 39-44, July.
    2. Mohamed Rochdi Keffala, 2018. "Analyzing the effect of derivatives on the financial soundness of commercial banks in Italy: An approach based on the CAMELS framework," Review of Financial Economics, John Wiley & Sons, vol. 36(3), pages 267-283, July.
    3. Efanga, Udeme Okon & Hanson, Uwem Effiong & Ekanem, Boniface Christopher, 2020. "Derivative Securities and Its Impact on the Nigerian Stock Market," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(9), pages 278-285, September.

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