The Monday Effect on Stock Returns at the Nairobi Securities Exchange

Abstract

The study was conducted to establish the existence of the Monday effect on stock returns at the Nairobi Securities Exchange (NSE). The study sampled the counters constituting the 20 share index owing to their 80% contribution to total volumes trading at the NSE. The study adopted the descriptive study methodology and employed the logarithmic mean to establish the average returns. The daily stock closing prices were used in computing the mean returns while the daily average returns were used in the comparison of the performance of each day. Basic descriptive statistics such as the mean, median, standard deviation, kurtosis and skewness was used as a preliminary analysis of the behaviour of stock prices during days of the week. The results of the study showed that the lowest returns are recorded on Tuesdays while the highest returns are recorded on Fridays. The recorded trend showed that the stock prices hit the highest price on Fridays, and record a dip of Mondays, consistent with the Monday effect theory. The results further showed that the daily returns between Monday and other days of the week are statistically significant. It is therefore imperative that the Monday‟s returns are significantly different from other days of the week.