The Effect Of Rights Issues On Performance Of Stock Prices Of Companies Listed In The Nairobi Stock Exchange

Abstract

This study is undertaken with a view to establish where rights issues by firms listed in the Nairobi Stock Exchange and have had successful rights issues have any impact on stock prices. These will include comparing and analyzing the trading activity before and after commencing trading and also abnormal returns. Any information content into the market is noted to progressively affect levels of trading volume .Intraday volatility decreases as information is absorbed conforming more closely to random walk which is usually caused by information based trading. Sensitivity of past trading before new information is fully absorbed and can significantly reveal a more wide spread use of such trading strategies setting new stock prices. Objective of the study is to determine whether firm's rights issues commencing trading generate any increase or decrease of share price before and after on stock price of a firm. Data extracted from the NSE Daily stock and NSE hand book is analyzed using SPSS with focus on comparing critical F-value. From the data analysis and resulting table shows whether companies have had any impact pre and post commencing trading