Securities Exchange Research Articles

An institutional account of responsiveness in financial regulation- Examining the fallacy and limits of ‘same activity, same risks, same rules’ as the answer to financial innovation and regulatory arbitrage

Financial regulators face the persistent issue of being challenged by financial innovations and regulatory arbitrage. This article argues that a functional approach of ‘same activity, same risks, same rules’ is potentially vague and insufficient, and does not provide clear guidance for regulators. By critically discussing the US Securities Exchange Commission's and UK Financial Conduct Authority's approaches to cryptoasset offers, the paper argues that whether and how regulators respond to financial innovation crucially depends on regulators’ institutional structures. These structural limitations provide empowering as well as constraining aspects in relation to regulatory objectives and mandates, shaping financial regulators’ responsiveness in different ways. The paper argues that an institutional account of regulatory responsiveness more accurately explains policy responses. The benefits and drawbacks of such policy responsiveness are also crucially shaped by these institutional structures.

DLF Ltd. vs. Securities and Exchange Board of India

The Security Exchange Board of India (hereinafter referred to as SEBI) and Delhi and Finance Limited (hereinafter referred to as DLF) recently engaged in a legal dispute over the details DLF disclosed in its "red herring prospectus." The disclosure relating to three of DLF's subsidiaries, over which SEBI claimed DLF held constructive control, was challenged by SEBI. Additionally, SEBI claimed that DLF concealed an FIR that had been filed against it, substantially impairing the present and future interests of its prospective shareholders. This was deemed by SEBI to be a flagrant breach of both the disclosure and investor protection (DIP) guidelines[1] and the rules for the issuance of capital and disclosure obligations. SEBI prohibited DLF and six of its senior management officers from accessing the capital market for three years as a result of the same. This ruling was contested before the Securities Appellate Tribunal, which then investigated the facts and provided more insight into the case that will be examined in more detail. This case sheds significant light on the corporate veil concept, the disclosure obligations when offering shares to seek funds from the capital market, and the conditions and parties involved in a lawsuit to dispute such disclosure of information. Given that DLF is a top building and construction company, there is a focus on establishing the proper standards of transparency. This case establishes a significant precedent for a highly strong corporate and industrial culture.

Corporate Technological Capability as a Driver to Firm Performance: A Study on Firms Listed at the Nairobi Securities Exchange

The aim of this paper was to assess the role played by corporate technological capabilities on firm performance. The ability of a firm to integrate information technology in its operations has been known to be integral in driving organizational success by promoting efficiency and effectiveness. The prevailing underperformance of the listed firms in Kenya raises the question on whether these firms have integrated adequate technology and whether they have what it takes to effectively incorporate technology in their operations, hence the subject of this study. Through a descriptive and exploratory research design, the study surveyed 240 senior management personnel drawn from the 64 listed firms using a structured questionnaire. The data was analysed using SPSS and Amos software for descriptive statistics and structural equation modelling respectively. The findings revealed that technological capabilities had a significant influence on the performance of firms listed at the NSE (R2 = .096; β = 0.150; P=0.0001<0.05). It was concluded that through adequate ICT infrastructure, ICT human skills and the commitment to integrate and accept use of ICT, the listed firms would strengthen their operational efficiency thus record superior performance.

Fog‐Sec: Secure end‐to‐end communication in fog‐enabled IoT network using permissioned blockchain system

AbstractThe technological integration of the Internet of Things (IoT)‐Cloud paradigm has enabled intelligent linkages of things, data, processes, and people for efficient decision making without human intervention. However, it poses various challenges for IoT networks that cannot handle large amounts of operation technology (OT) data due to physical storage shortages, excessive latency, higher transfer costs, a lack of context awareness, impractical resiliency, and so on. As a result, the fog network emerged as a new computing model for providing computing capacity closer to IoT edge devices. The IoT‐Fog‐Cloud network, on the other hand, is more vulnerable to multiple security flaws, such as missing key management problems, inappropriate access control, inadequate software update mechanism, insecure configuration files and default passwords, missing communication security, and secure key exchange algorithms over unsecured channels. Therefore, these networks cannot make good security decisions, which are significantly easier to hack than to defend the fog‐enabled IoT environment. This paper proposes the cooperative flow for securing edge devices in fog‐enabled IoT networks using a permissioned blockchain system (pBCS). The proposed fog‐enabled IoT network provides efficient security solutions for key management issues, communication security, and secure key exchange mechanism using a blockchain system. To secure the fog‐based IoT network, we proposed a mechanism for identification and authentication among fog, gateway, and edge nodes that should register with the blockchain network. The fog nodes maintain the blockchain system and hold a shared smart contract for validating edge devices. The participating fog nodes serve as validators and maintain a distributed ledger/blockchain to authenticate and validate the request of the edge nodes. The network services can only be accessed by nodes that have been authenticated against the blockchain system. We implemented the proposed pBCS network using the private Ethereum 2.0 that enables secure device‐to‐device communication and demonstrated performance metrics such as throughput, transaction delay, block creation response time, communication, and computation overhead using state‐of‐the‐art techniques. Finally, we conducted a security analysis of the communication network to protect the IoT edge devices from unauthorized malicious nodes without data loss.

VOLUNTARY DISCLOSURE AND EQUITY FINANCING IN BRAZIL

The objective of this study was to verify whether, in the Brazilian market, voluntary disclosure is able to increase the amount of financing through issuance of equity, and conversely, to analyze if the amount of financing through equity increases firms’ voluntary disclosure level. It was made empirical research, using two multiple linear regression econometric models, we found the following results for the period studied (2010-2017): (i) the higher the level of voluntary disclosure, on average, the greater was the amount of equity financing of nonfinancial companies listed on the B3 (Brazilian Securities Exchange - Brasil Bolsa Balcão S.A.); and (ii) the greater the amount of equity financing, on average, the higher was the level of voluntary disclosure of nonfinancial companies listed on the B3. The relevance of this study, national and international, is to provide empirical evidence of the possibility of increasing the volume of financing through issuing shares by means of voluntary disclosure. Social implications, on the other hand, are the use of empirical results to help investors and regulators in decisions about the market's reaction to voluntary information.

Effect of Corporate governance on Financial Distress among the Firms Listed at Nairobi Securities Exchange

This study delves into the intricate effect of corporate governance on financial distress in Kenya among the firms listed at the Nairobi Securities Exchange. The recent economic growth and development in Kenya have attracted increased attention to the effectiveness of corporate governance practices adopted by businesses. The study examines the effect of various corporate governance factors, such as Board Size, Board Independence, Audit Committee Independence, and Firm Size, on financial distress in listed companies on the Nairobi Securities Exchange. To evaluate the significance of each factor in influencing financial distress, the analysis employs a Type I Sum of Squares approach using XLSTAT software. The findings reveal that Board Size and Firm Size exhibit highly significant relationships with financial distress, indicating their crucial roles in influencing a company's financial stability. Furthermore, Board Independence demonstrates a statistically significant relationship with financial distress, underscoring the importance of independent directors in mitigating financial risks. Although Audit Committee Independence exhibits borderline significance, it provides indications of a potential relationship with financial distress. Overall, the study offers valuable insights into the factors affecting financial distress in Kenyan companies and emphasizes the significance of robust corporate governance practices in ensuring financial stability and resilience.

Financial Risk Management and Financial Performance of Investment Firms Listed at Nairobi Securities Exchange, Kenya

Financial Risk Management and Financial Performance of Investment Firms Listed at Nairobi Securities Exchange, Kenya

EFFECT OF PORTFOLIO MANAGEMENT ON THE FINANCIAL PERFORMANCE OF LISTED INSURANCE FIRMS IN THE NAIROBI SECURITIES EXCHANGE, KENYA

<p>The performance of listed insurance companies in Kenya has over time been unstable, despite its contribution to Kenya’s GDP. Whereas the firms have diversified investment asset portfolios, the financial performance of these companies has generally remained low; as evidenced by inconsistent revenues. The purpose of this paper is to establish the relationship between portfolio management and the financial performance of the listed insurance firms in Nairobi Securities Exchange (NSE), Kenya. The study has been guided by Modern Portfolio Theory, allowing for the integration of mixed securities. correlational research design has been employed on a target population of six (6) listed insurance companies at the Nairobi Securities Exchange. census technique of data collection to obtain secondary data through the document review method was used. Analyzing data through descriptive and inferential statistics, the following results were obtained; showing a positive significant effect of both portfolio size (β = 0.4859, p = 0.002) and portfolio asset allocation (β = 0.4031, p = 0.000) on the financial performance of listed insurance firms at NSE. However, the results yielded a negative but significant effect of portfolio risk (β = - 0.02546, p = 0.002) on financial performance; implying that a unit increase in portfolio size and portfolio asset allocation leads to 48.59% and 40.31% increase in financial performance of listed insurance firms, respectively. However, Portfolio risk has a negative effect, implying that a unit increase in portfolio risk leads to a 2.55% reduction in financial performance. It can therefore be concluded that portfolio management influences the financial performance of insurance firms listed at the NSE, thereby recommending that listed insurance firms in the NSE should increase the level of portfolio management by giving attention to such elements as portfolio size, portfolio asset allocation, and portfolio risk; which are important predictors of the firms’ financial performance, alongside determining the specific mix of investments generating the highest return for a given level of risk, which will lead to increased profitability. </p><p><br /><strong>JEL:</strong> G10; G20; G22</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0069/a.php" alt="Hit counter" /></p>

Corporate Technological Capability as a Driver to Firm Performance: A Study on Firms Listed at the Nairobi Securities Exchange

The aim of this paper was to assess the role played by corporate technological capabilities on firm performance. The ability of a firm to integrate information technology in its operations has been known to be integral in driving organizational success by promoting efficiency and effectiveness. The prevailing underperformance of the listed firms in Kenya raises the question on whether these firms have integrated adequate technology and whether they have what it takes to effectively incorporate technology in their operations, hence the subject of this study. Through a descriptive research design, the study surveyed 240 senior management personnel drawn from the 64 listed firms using a structured questionnaire. The data was analysed using SPSS and Amos software for descriptive statistics and structural equation modelling respectively. The findings revealed that technological capabilities had a significant influence on the performance of firms listed at the NSE (R2 = .096; β = 0.150; P=0.0001<0.05). It was concluded that through adequate ICT infrastructure, ICT human skills and the commitment to integrate and accept use of ICT, the listed firms would strengthen their operational efficiency thus record superior performance.

Sustainable Development Goals Disclosure among Top 25 Listed Companies in Kenya

The paper aimed to examine the extent of Sustainable Development Goals disclosure by the top 25 listed companies in Kenya (NSE25) based on the global sustainability reporting indicators by UNCTAD’s Guidance on Core Indicators (GCI) framework. Based on UNCTAD's Guidance on core indicators for entity reporting on contribution to SDG implementation (GCI) framework, the paper evaluated the extent of SDG disclosure by the top twenty-five (NSE25) listed companies in Kenya in four broad areas of sustainability, namely economic (8 indicators), environmental (11 indicators), social (7 indicators), and the institutional regions (7 indicators). The 2019/2020 annual, integrated and sustainability reports of 25 major firms listed on the Nairobi Securities Exchange were analysed and coded using a content analysis technique. The findings provided strong evidence that NSE 25 corporations are committed to sustainable development agenda based on the extent of the disclosure of corporate activities related to the UN SDGs, with an overall GCI score of 0.77. The economic area had the highest total GCI score at 0.94; the institutional area had the second-highest GCI score of 0.82. The social area' with a GCI Index of 0.72, was placed third, and the environmental area at 0.65. Enterprises are critical to achieving the SDGs. Hence SDG disclosure requires extensive research to identify the factors that impact it. This research contributes to the legitimacy theory by evaluating the extent of SDG disclosure by listed firms. However, the study only focuses on how the top 25 Kenyan listed corporations reveal SGD-related information; care should be given when drawing generalisations about other companies. The outcomes of this research advocate for explicit commitment and a concerted effort for SDG implementation from African business organisations. SDGs cannot be achieved just by governments; corporations must also play a significant role. The study underlines the importance of corporates adopting sustainability initiatives and including SDG information within their business reporting cycle. The results of this study contribute to the understanding of SDG reporting in Kenya and other developing economies, as it provides policy implications for corporations, governments, policymakers and agencies in terms of regulation, awareness, and capacity development relevant to sustainability reporting. The UNCTAD GCI framework is a novel approach to sustainability disclosure research. It expands knowledge of sustainability disclosure, corporate reporting, and SDG studies in Kenya and other developing countries. To the best of our knowledge, this paper is among the first to provide in-depth empirical evidence on the status of SDG disclosure among listed firms in Kenya. Furthermore, this research provided valuable information on the role of corporations in achieving sustainable development goals in response to earlier research gaps identified.

Effect of Equity on Financial Performance of Listed Insurance Corporations In Kenya

Efforts to revive ailing corporations across the world have mostly been centered on financial restructuring and re-engineering. Slow growth in the financial performance of insurance companies in Kenya coupled with low market penetration rate motivated the researcher’s interest to investigate the effect of Equity on financial performance of these organizations. Three theories namely the Modigliani and Miller Theory, the Pecking Order Theory, and the Trade Off Theory guided the study. The concepts of capital structure and financial performance as well as empirical literature are discussed in chapter two. A descriptive research design was adopted to describe the relationship between the variables of the study. Whereas equity capital forms the independent variable, financial performance as measured by ROA formed the dependent variable. The target population was a census of all insurance firms listed at the Nairobi Securities Exchange (NSE). The study used secondary data extracted from the annual financial reports of respective firms from 2016 to 2020. Data coding and analysis was done using version 28 of the SPSS and STATA version 18 software while financial ratios were calculated using Microsoft Excel spreadsheet. The data was then summarized using descriptive statistics which included the standard deviation and weighted means. There were significant positive correlations between ROA and Equity Ratio, suggesting that higher equity was associated with better financial performance (ROA). Overall, the findings indicated that Equity had a positive correlation with financial performance according to regression and panel data analysis. The study recommends that insurance corporations should prioritize equity over debt in their capital structure decisions so as to increase their financial performance

Disclosure index development for sustainable procurement: An Australian perspective

In recent years, there is a growing demand for corporations to demonstrate their commitment for and performance in sustainable sourcing of their goods and services. This has led to the promulgation of several sustainable procurement indicators (SPIs) and disclosure indexes (DIs) to guide businesses in meeting ‘responsible’ or ‘ethical’ business operations. However, extant SPIs and guidelines have reliability challenges due to inconsistencies and varying focuses as most DIs are skewed towards non-discriminatory practices and equity in wealth and income distribution. This study proposes a methodological framework and uses 33 indicators of globally accepted ethical norms and standards for business conduct to develop an index for disclosure of sustainable procurement practices. Based on the proposed framework, we conducted a proof-of-concept study using a sample of 60 companies in four industries listed in the Australian Securities Exchange. The findings reveal significant variations in disclosure, with less than 20% of the investigated companies reporting 80% or more of the 33 indicators that constitute the disclosure index. It is observed that companies tend to disclose more in the governance and the environmental dimensions, but less in the economic and the social domains. These results indicate that the disclosure index developed using the proposed framework can be a useful tool for assessing transparency in reporting sustainable procurement practices and can help improve sustainability performance across the supply chain. The index thus provides stakeholders and the public with a lens to examine and monitor a company's sustainable sourcing practices.

Strategic Capabilities and Performance of Insurance Firms Listed at the Nairobi Securities Exchange, Kenya

The insurance sector has witnessed growth in both the corporate and private sectors driven by increased insurance uptake among corporations and individuals. However, despite the dynamic nature of the sector, some insurance firms face significant challenges in keeping up with their counterparts. To address the performance variations in the insurance sector, it is crucial to examine strategic capabilities such as technical knowledge, innovation, learning culture and service quality and their impact on performance of NSE listed firms in Kenya. This study aims to investigate how strategic capabilities influence the performance of these firms. The specific objectives of the study were: to examine the effect of innovation capability on the performance of NSE-listed insurance companies in Kenya; to determine the effect of service quality capability on the performance of NSE-listed insurance companies in Kenya; to investigate the effect of technical knowledge capability on the performance of NSE-listed insurance companies in Kenya and to examine the effect of learning culture capability on the performance of NSE-listed insurance companies in Kenya. The study was anchored on the Resource based view theory, Knowledge based view and Dynamic capabilities theories. A descriptive cross-sectional survey research design was adopted targeting 258 senior staff members of six listed insurance firms on the Nairobi Securities Exchange. A sample size of 156 respondents was determined by Yamane formula and stratified random sampling technique used for sample selection. Structured questionnaire was used for primary data collection with a pilot test involving 16 respondents to ensure the validity and reliability of the research instrument. Data analysis was performed with an aid of statistical packages for social sciences (SPSS) software employing descriptive statistics, correlation analysis and multiple regression models. The findings revealed that innovation strategic capability, service quality strategic capability, technical knowledge strategic capability and learning culture strategic capability all had a positive significant relationship with performance of NSE-listed insurance companies in Kenya. The study therefore recommended that insurance firms listed at the NSE should invest in innovation, service quality, technical knowledge and learning culture to enhance their performance.

Trade credit supply and financial distress outcomes: evidence from Australian voluntary administrations

PurposeThe objective of this study is to investigate the relationship between trade credit supply and financial distress outcomes, considering the role that trade credit plays as a substantial source of liquidity for distressed companies. Specifically, it examines whether there is an association between trade credit supply and the outcomes experienced by companies that undergo the voluntary administration (VA) insolvency procedure under Australian corporate law.Design/methodology/approachThe study examines a sample of companies that were listed on the Australian Securities Exchange and entered VA between 2002 and 2019. Ordered logistic regression is used to determine the relation between trade credit and VA outcomes. The VA outcomes considered are as follows: (1) company liquidation, (2) orderly dissolution through an agreement with creditors, or (3) an agreement with creditors for reorganization of all or part of the company's business.FindingsThe findings show that trade creditors' willingness to supply credit is influenced by their rational expectations about the future prospects of financially distressed customers. Higher levels of trade credit and an increase in trade credit supply prior to VA are associated with a greater probability of achieving a reorganization versus a liquidation or dissolution outcome.Originality/valueThere is no apparent prior study investigating the connection between trade credit supply and outcomes for distressed companies entering insolvency administration. Therefore, this study provides novel evidence on the role of trade credit in the context of financial distress. Understanding the relationship between trade credit supply and outcomes is particularly significant considering that many jurisdictions offer distressed companies the opportunity to pursue reorganization under their insolvency laws. Examining financial distress and trade credit in the Australian creditor-friendly context expands on existing research. Prior research has predominantly relied on data from the United States, which has debtor-friendly bankruptcy law. Consequently, these studies may lack generalizability to jurisdictions with creditor-friendly law such as Australia.

Human Resource Planning Subsystem and Firm Performance of Listed Companies at the Nairobi Securities Exchange in Kenya

Globally, information systems have revolutionized various sectors of the economy, and their significance is particularly pronounced in developed countries. Human Resource planning subsystem has emerged as a time-saving and cost-effective solution in managing human resources. The study aims to explore whether there is a significant link between Human Resource planning subsystem utilization and the performance of listed companies at NSE. This study examines the relationship between Human Resource planning subsystem and firm performance of listed companies at the NSE in Kenya. Human Resource planning subsystem is a crucial tool adopted globally to streamline human resource management practices, including HR planning and performance management. The study analyzes the effect of Human Resource planning subsystem components, such as HR planning and firm performance, particularly focusing on the financial perspective, using the return on assets ratio. The study adopts an explanatory research design to identify causal links between Human Resource planning subsystem factors and firm performance. Both primary and secondary data are utilized in this research. Secondary data from financial statements provided by the Capital Markets Authority is combined with primary data collected from questionnaires and interviews conducted with HR managers of thirty listed companies. The study establishes that Human Resource planning subsystem components have a positive influence on the performance of companies listed at NSE. Human Resource planning subsystem facilitates the Workforce Demand Forecasting, Workforce Supply Forecasting, Skills Inventory and Analysis, Succession Planning leading to enhanced performance. Moreover, Human Resource planning subsystem aids in decision-making related to salary increments, promotions, retention, recognition of performance, layoffs, and identification of underperforming employees. The study further reveals that Human Resource planning subsystem effectively manages external information outside the organization, contributing to improved performance. Additionally, Human Resource planning subsystem enables employees to access their payroll information offsite, promoting convenience and reducing payroll administration expenses. Based on the findings, the study concludes that Human Resource planning subsystem, particularly the recruitment and selection subsystem, significantly affects firm performance among NSE-listed companies. Additionally, HR planning subsystem also plays a crucial role in influencing firm performance. To enhance firm performance, the study recommends the implementation and improvement of the Human Resource planning subsystem. Furthermore, it suggests investing in the enhancement of the Human Resource planning subsystem, as it has a direct impact on a firm's performance.

Hotel companies at Bucharest Stock Exchange. What do they offer to investors?

"Hotel groups listed on various security exchanges have the tendency to be representative for their respective country and/or to be emblematic worldwide. They expand and evolved from an owner-operator business model, still dominant in the 1980s, toward a sophisticated combination of the owner-operator model and asset-light business model. In the case of Romania, the owner-operator business model is dominant and is the common ground for the hotel companies listed at Bucharest Stock Exchange. The present paper has the following objectives: a) to investigate which of the former hotel companies listed on Rasdaq were chosen to be transferred on the new alternative trading system; b) if new hotel companies were willing to become publicly traded on BVB or in AeRO; c) to identify the portfolio of hotels for the listed companies, and d) to investigated the trading frequency, volume and value, and extract potential patterns. The period under scrutiny is May 2015 – May 2023. Based on the findings of the present paper the Romanian listed hotel companies do not attract the investors’ attention since they do not offer too much. Some of the problems might be generated by the low free-float and controlling shareholders/groups. Though, the main problems seem to be related to the companies’ lack of proper transparency regarding their activities (and profit centers), hotel/lodging portfolios, and the absence of (at least) domestic known brand. Keywords: hotel companies, Bucharest Stock Exchange, shareholders, free-float JEL Classification: Z31, Z33, G10"

Does XBRL adoption eliminate misclassification of income statement items?

PurposeThe financial world of today is evolving at a rate that can be challenging to keep up with and comprehend due to developments in information and communication technology. When compared to a conventional disclosure, the eXtensible Business Reporting Language (XBRL), which was named one of the top ten accounting technologies, has a clear advantage in reducing information asymmetry by providing interactive data disclosure. This study aims to examine whether forcing companies to adopt XBRL would cause them to prefer misclassifying income statement items as an alternative to more risky earnings management methods.Design/methodology/approachThe study sample includes nonfinancial UAE companies listed on Dubai Financial Market and Abu Dhabi Securities Exchange from 2012 to 2019. Fixed effect and system General Method of Moments regressions were used to analyze the study data.FindingsThe study found that XBRL reporting resulted in lowering the quality of financial reporting as companies have a higher tendency to misclassify income statement items as earnings management mechanism.Practical implicationsThe findings of this research can be used by stakeholders and practitioners in the UAE to better understand whether the use of XBRL is linked to the engagement of financial reporting manipulative practices. The findings of this study also inform policymakers and regulators about the consequences of companies formally adopting digital disclosure language in an effort to improve the quality of their reporting. Besides, the results offer guidance to regulators considering imposing XBRL usage regulations.Originality/valueLimited number of studies have tested the association between XBRL mandatory adoption and misclassification of income statement items as an earnings management tool in the Gulf Cooperation Council region.

Marginal Fields Development in Nigeria: A Review of Extant Strategies

This paper focuses on the development of marginal fields in Nigeria, the challenges, economic viability, and the role of the government in implementing the contributions of marginal fields to the national oil production output. Also, the previously reported marginal field development and management practices in the Niger Delta oilfield are x-rayed. Following the definition of the marginal field is an overview of different types of marginal field development in the Niger Delta region. Also, the United Kingdom Oil and Gas Recovery Regulatory Commission, the United States Security Exchange Commission, and the Nigerian government's categorization of what compose of a marginal field are included. In addition, the participation of the Nigerian federal government and contributions to the development of marginal fields in the bidding of marginal assets to the development of infrastructure are presented. Particular attention is paid to the factors that affect the development and choice of production strategies in the marginal fields of the Niger Delta. These factors discussed in detail in the document include environmental, technical, social, political, and economic factors. Again, different management and development strategies used by some marginal fields of the Niger Delta are x-rayed and presented with a particular focus on three of those strategies. The three common approaches in the Niger Delta marginal field development strategy are water flooding, infill drilling, and infrastructure sharing. These approaches have made marginal fields in Nigeria operational, competitive, and economically viable to date.

Technical Analysis and Efficient Market Hypothesis in the Nepal Stock Exchange (NEPSE)

Stock exchange is a trading platform for the buyer and seller of securities. The stock exchange acts as a “barometer” of the health of the economy or considered a mirror of economy. If the market as a whole expects economic prospects to improve, share price will rise, and vice versa. The history of securities market began in Nepal with the flotation of shares by Biratnagar Jute Mills Ltd and Nepal Bank Ltd in 1937 A.D. Introduction of the company Act in 1964 A.D., and the establishment of Securities Exchange Center Ltd in 1976 was other significant developments relating to capital markets in Nepal. At present there is only one stock exchange in Nepal, which is also called secondary market i.e. Nepal Stock Exchange (NEPSE). Nowadays, Nepal’s stock market has become major area of investments. Basically, there are two approaches of analyzing the securities: fundamental analysis and technical analysis. Beside these there is another technique for analyzing the share price behavior that is called efficient market hypothesis. Each price of an individual share is independent of the previous price. The price of a moment does not affect the price of another moment. This type of moment of prices is called random walk of prices.

Effect of Quality of Financial Reporting on Performance of Manufacturing Firms Listed in the Nairobi Securities Exchange in Kenya

Even though manufacturing firms in Kenya are of great value, there are inadequacies in financial performance. Kenyan Manufacturing firms are reporting losses, as evidenced by audit committee shortcomings and low earnings. The objective of the study was to determine the effect of audit committee effectiveness on the financial performance of manufacturing firms in Kenya. This study adopted a mixed research design with a target population of eight manufacturing firms listed at the Nairobi Securities Exchange (NSE), all of which were involved through the census. Secondary data was collected from financial statements between the 2015 and 2021 financial years. Data analysis involved descriptive and inferential statistics. Descriptive based on frequencies, percentages, and the mean. Pearson correlation results showed a weak but significant correlation between financial performance and audit committee effectiveness (ACE) (r=0.0355, p<0.05 and r=0.0858, p<0.05 for LN ACE 1& LN ACE2 respectively). This shows that the quality of financial reporting had significant effects on the performance of manufacturing firms listed in the Nairobi Securities Exchange in Kenya. Based on these findings, the study recommended that the number of auditors, as well as the stock owned by manufacturing firms, be enhanced for better income.