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Earnings Announcement and the Performance of Security Prices of Companies Listed on the Nairobi Securities Exchange, Kenya

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  • Raude John O. Messo
  • John Byaruhanga

Abstract

Security price performance is a significant economic activity which measures the company’s wealth and plays a vital role in economic growth. Security price performance reflects investor perception to earn and grow returns in the future. However, this is not the case for the NSE, Kenya N20 share index, which for the past two to three years experienced declines in security prices prompting this study to investigate the effect of Earnings Announcements on the Performance of Security Prices of companies listed on the NSE, Kenya. The study applied the Dividend Signaling Theory, the Efficient Market Hypothesis, and the Market Expectation Theory. The study used the Event Study Methodology, administered a questionnaire and schedules to collect data from 25 listed companies, and used parametric statistical techniques - the ANOVA and Regression Analysis to analyze data and test the Hypotheses. The study found Earnings Announcements were insignificant at 5 percent significant level; thus, concluded that Earnings Announcements did not affect the Performance of Securities of companies listed on the NSE, Kenya. This study will guide the market activities and provide a better understanding of how to optimize returns. It will enable the policymakers to assess and evaluate the current status and, provide a platform for making reviews, designs, and formulate policies to regulate and control trading activities on the financial markets, contribute to knowledge and strengthen the foundation for further research. Future research should investigate the effects of other events on the performance of security prices of listed companies.

Suggested Citation

  • Raude John O. Messo & John Byaruhanga, 2021. "Earnings Announcement and the Performance of Security Prices of Companies Listed on the Nairobi Securities Exchange, Kenya," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(9), pages 188-188, July.
    • Handle: RePEc:ibn:ijbmjn:v:14:y:2021:i:9:p:188
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    References listed on IDEAS

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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