Influence of Earnings on Market Share Prices of Firms Listed at the Nairobi Securities Exchange

Abstract

With Kenya as a prominent emerging market in Africa, the Nairobi Securities Exchange is Africa's biggest stock trade as respects exchanging volumes, and fifth on the subject of market capitalization as a rate of Gross Domestic Product. Consequently, there is a growing necessity to determine the effect of earning on share prices of listed firms. The aim of the study was to establish how earning per share influence share prices of firms at Nairobi securities exchange. This study was guided by random walk theory and descriptive research design. Target populatiosn were 61 firms at NSE. The study utilized secondary data. Data analysis was carried out using descriptive and regression analysis. The R squared was .563 indicated that 56.3% of market share prices was explained by share earnings. The earnings per share influenced market share prices (β=0.936 and p <0.05). The study concluded that the earnings influenced the market share prices. Earnings are pertinent and impact the share price of a corporation hence its worth incomparable to the hypotheses that view dividend policy as extraneous. The study recommends that Investors' who invest in stocks for short term or long-term purposes need to consider earning per share when investing in shares. In addition, investors should consider previous earning per share when structuring their portfolio. Such an action will be interpreted positively by investors and this will boost demand for the shares.