The Effects of Financial Announcement Results on Share Returns and Volume of Shares Traded for Companies Listed at the Nairobi Securities Exchange

Abstract

The research objectives for the study were to determine the effects of financial results announcements on share returns and volume of shares traded for companies listed at the Nairobi Securities Exchange. The study used a descriptive cross-sectional study design and data was collected from the Nairobi Securities Exchange. The data collected was analyzed using Microsoft Excel 2007 and event study was done for a window period of 31 with 15 days prior to announcement and 15 days after the announcement. With regards to the first objective of the study, the overall results showed that there was no significant return in the stock market as a result of end-year financial return using both abnormal returns (AR) and cumulative abnormal returns (CAR). With regards to the second objective of the study, the findings indicated that there were no abnormal significant shares traded on the announcement dates, but there was significant trading within the range of ±5 days before and after announcement dates and finally no significant trading volumes within the ±15 days. The study recommended that there should be a centralized database where company financial results announcement dates properly kept, and also the Nairobi Securities Exchange should educate the public on securities investments and attract more institutional investors and foreign investors.