Susan M. Kabiro is currently working as a principal accountant at The National Treasury having joined the institution in November 2009 as an accountant one. Before then she was working as an account assistant in Focus Publishers and Jos Hansen and Soehne EA Ltd respectively. She is due to graduate from UON with MSC (Finance), holds BA (Economics & sociology) 2nd class upper from UON, CPA (K) Strathmore University and SMC certificate from KSG Kabete campus. Born in 1984 she attended Nginda girls secondary for O’level and Wangai primary in Murang’a County. She is a Christian and married to Mr.John Ngare and are both blessed with three boys namely: Levis, Leon and Lemuel.
Abstract
Shareholders’ wealth maximization is the primary objective of any firm. Earnings management is a major corporate issue and is therefore no exception, most studies have reported the negative side of earnings management, and other studies differ from the argument by suggesting that earnings management can be practiced in a positive way. This study aims to ascertain the effect of earnings management on stock returns of firms quoted at the NSE. The population study was all the 63 companies quoted at the NSE. The independent variables were earnings management represented by discretionary accruals, capital structure represented by debt ratio, liquidity represented by current ratio, firm size represented by natural logarithm of total assets and management efficiency represented by the ratio of total revenue to total operating expenses. Stock return was the dependent variable and was represented by change in share price plus any dividend issued during the period. Secondary data was collected from January 2014 to December 2018 annually. Research design was descriptive cross-sectional design, multiple linear regression was applied in determining the relationship between the variables. SPPS software analyzed data.
From analysis, R-square value of 0.245 was produced meaning 24.5% of the changes in the stock returns of NSE listed firms can be described by the independent variables studied and 75.5% in the changes in stock returns is affiliated to other variables outside the scope of this study. Also, independent variables of this study are moderately correlated with the stock returns (R=0.495). ANOVA outcomes revealed that the F statistic was significant at 5% level with a p=0.000. Henceforth, the model was appropriate in explaining the association between the selected variables.
Research Supervisors
PROF. CYRUS IRAYA