Main Article Content

Abstract

Rights issues give existing shareholders the option of purchasing new shares, normally issued at a discount to the prevailing market price (Lambrechts & Mostert, 2009) to encourage participation in the capital rising over purchasing shares in the market. Rights issues have been the subject of much research by academics and practitioners for over two decades (Bayless & Jay, 2008). In Kenya, stocks are traded in Nairobi Stock Exchange (NSE) which is the only stock market in Kenya and by far the most important stock market in East and Central Africa.  It is clearly evident that there is limited empirical evidence on effect of rights issue on market performance of the companies quoted at the Nairobi Securities Exchange. This study sought to establish the effects of rights issue on market performance of the companies quoted at the Nairobi Securities Exchange. The research design employed in this study was descriptive research design inform of a survey. The population of interest of this study comprised of 60 companies listed at the Nairobi Securities Exchange. The study sampled 60 respondents for this study. The researcher used structured questionnaires as the main data collection instrument. A content analysis and descriptive analysis was employed. The content analysis was used to analyze the respondents’ views about the effect of rights issue on market performance of the companies quoted at the Nairobi Securities Exchange. Descriptive statistics such as means, median mode and standard deviation was also used to help in data analysis. Tables and other graphical presentations as appropriate was used to present the data collected for ease of understanding and analysis.  Inferential statistics regression was done to establish the effect of rights issue on market performance of the companies quoted at the Nairobi Securities Exchange. The study established market timing had a positive effect on market performance of the companies quoted at the Nairobi Securities Exchange. The study also established that financing decision had a positive effect on the market performance of the companies quoted at the Nairobi Securities Exchange. The study revealed that rights issues had a positive impact on the market performance of the companies quoted at the Nairobi Securities Exchange. The study found that future earning had a positive effect on market performance of the companies quoted at the Nairobi Securities Exchange. The study revealed that there is need form managers in firm listed in the NSE to make the right timing for rights issue as this will significantly influence their performance. There is need for the firm listed in the Nairobi Securities Exchange to apply various financing decision so as to improve their market performance of the companies quoted at the Nairobi Securities Exchange.

Article Details