EARNINGS VARIABILITY AND SHARE PRICE VOLATILITY OF QUOTED NON-FINANCIAL FIRMS AT THE NAIROBI SECURITIES EXCHANGE

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Published Sep 8, 2024
DOI https://doi.org/10.61426/business.v5i1.235

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STEPHEN NDIRANGU MAINA
PhD Student, Department of Economics Accounting and Finance, School Of Business and Entrepreneurship, College of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, Kenya
TABITHA NASIEKU, PhD
Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
JULIUS MIROGA, PhD
Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya

Abstract

Share price volatility affects smooth operations of the financial system creating uncertainties hence affecting stock market performance. This study sought to establish the effect of earnings variability on share price volatility of quoted non-financial firms at Nairobi Securities Exchange. The position of stock market efficiency, and information asymmetry crusades by signalling theory become unclear especially from the Nairobi Stock Exchange (NSE) context, which further necessitated the need to carry out the study. Efficient market hypothesis was analysed to test the significance of the objective of the study. The study adopted quantitative research design to evaluate earnings variability and share prices of quoted non-financial firms at Nairobi securities exchange. The population of the study of 44 -financial companies quoted at the NSE over the period January 2003 through December 2022. The mean EV ratio value presents an increased likelihood of earnings smoothing. Therefore, the likelihood of an enterprise’s earnings manipulation in the financial statements is higher. This signifies that there was high variation in volatility which is not desirable for the measures of dispersion.

Article Details

Issue
Vol 5 No 1 (2024)
Section
Articles
Author Biographies

STEPHEN NDIRANGU MAINA, PhD Student, Department of Economics Accounting and Finance, School Of Business and Entrepreneurship, College of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, Kenya

PhD Student, Department of Economics Accounting and Finance, School Of Business and Entrepreneurship, College of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, Kenya

TABITHA NASIEKU, PhD, Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya

Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya

JULIUS MIROGA, PhD, Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya

Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya

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