EARNINGS VOLATILITY AND MARKET VALUE OF COMPANIES LISTED AT THE NAIROBI SECURITIES EXCHANGE MARKET
Abstract
The objective of the study was to establish the effect of earnings volatility on market value of listed firms at the Nairobi securities exchange market. This research adopted a cross-sectional correlation design. The population of this study composed of all companies listed at the Nairobi Securities Exchange. The study focused on thirty (30) companies that were consistently listed with all the data available in the NSE handbook between the years ended December 31, 2011 and December 31, 2015. This research used secondary data from published audited financial statement of the various companies and the NSE hand book. The data analysis then involved correlation analysis using a multiple linear regression model. From the findings, the study concluded that earnings volatility have positive effect on the market value of listed firms. It was also established that payout ratio have positive effect on the market value of firms. Based on the findings that earnings volatility and payout ratio have a positive effect on the value of listed firms, management of such firms should put in place mechanisms to deal with such variables to help create a positive signal to the stakeholders.
Key Words: Earnings Volatility, Market Value, Profitability
CITATION: Gworo, C. O. (2019) Earnings volatility and market value of companies listed at the Nairobi Securities Exchange market. The Strategic Journal of Business & Change Management, 6(1), 17 – 26
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i1.1031
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