Abstract:
Purpose: The study sought to check the efficiency of Nairobi Securities Exchange with
regard to dividend announcements on semi-strong form of efficiency.
Methodology: The study employed event study methodology which is descriptive in
nature. Census was carried out to determine which dividend announcements qualified for
analysis. The period of study extended for five years from 2012 to 2016. Window period
covered 30 days before and 30 days after the announcement. Average abnormal returns
were evaluated for significance at 95% confidence level.
Findings: The results indicated that the market was efficient for 4 years except one year
where the market was found to be inefficient in semi strong form perhaps due to the
prevailing economic conditions during the year.
Unique contribution to theory, practice and policy: This study recommended that the
NSE be checked for efficiency from time to time. This is informed by the fact that an
efficient market allocates the resources optimally from areas they are less required to
sectors they are highly required hence contributing to economic development. The study
recommends regulatory bodies to come up with strategies to enhance and sustain
efficiency at NSE.
