Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community

Stephen Matheka Makau; Samuel Owino Onyuma; Agatha Nabwire Okumu

doi:doi:10.11648/j.jfa.20150301.12

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Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community

Stephen Matheka Makau, Samuel Owino Onyuma, Agatha Nabwire Okumu

Published in Journal of Finance and Accounting (Volume 3, Issue 1)

Received: 19 January 2015 Accepted: 1 February 2015 Published: 3 March 2015

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Abstract

The purpose of this study was to examine the impact of cross listing on share liquidity for cross listed firms within East African Community, with the domestic market being the Nairobi Securities Exchange. A census was carried out for Kenyan listed firms that have cross-listed into other EAC exchanges in the last five years. Secondary data was collected from the NSE data base. Stock traded volume and turnover were used as proxy measures of stock liquidity. Their means were calculated pre- and post- cross-listing and tested for significance using a paired T-test at five percent level. Most of the results were not statistically significant. Stock liquidity improved for Equity Bank, Nation Media Group and Centum Investments measured by traded volume with that of Equity Bank and Centum being statistically significant. Kenya Commercial Bank stock liquidity declined after cross-listing, though the decline was not statistically significant. Stock liquidity measured by turnover improved for Nation Media Group and Centum shares, while it declined for Equity Bank and Kenya Commercial Bank shares after cross-listing. Again, only results for Centum was statistically significant. Overall, stock liquidity improved for Nation Media Group and Centum shares, while it declined for Equity and Kenya Commercial Bank shares. Generally, it can be concluded that cross-listing improves a firm’s stock liquidity both positively and negatively according to the measure of liquidity utilized, although in most cases that impact was not statistically significant. Based on these findings, the study recommends that corporate managers should consider cross-listing for other reasons such as penetration of new markets but not to improve their stock liquidity.

Published in	Journal of Finance and Accounting (Volume 3, Issue 1)
DOI	10.11648/j.jfa.20150301.12
Page(s)	10-18
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Cross-Border Listing, Stock Liquidity, Traded Volume, Stock Turnover, Nairobi Securities Exchange

References

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APA Style

Stephen Matheka Makau, Samuel Owino Onyuma, Agatha Nabwire Okumu. (2015). Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community. Journal of Finance and Accounting, 3(1), 10-18. https://doi.org/10.11648/j.jfa.20150301.12

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ACS Style

Stephen Matheka Makau; Samuel Owino Onyuma; Agatha Nabwire Okumu. Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community. J. Finance Account. 2015, 3(1), 10-18. doi: 10.11648/j.jfa.20150301.12

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AMA Style

Stephen Matheka Makau, Samuel Owino Onyuma, Agatha Nabwire Okumu. Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community. J Finance Account. 2015;3(1):10-18. doi: 10.11648/j.jfa.20150301.12

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@article{10.11648/j.jfa.20150301.12,
  author = {Stephen Matheka Makau and Samuel Owino Onyuma and Agatha Nabwire Okumu},
  title = {Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community},
  journal = {Journal of Finance and Accounting},
  volume = {3},
  number = {1},
  pages = {10-18},
  doi = {10.11648/j.jfa.20150301.12},
  url = {https://doi.org/10.11648/j.jfa.20150301.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20150301.12},
  abstract = {The purpose of this study was to examine the impact of cross listing on share liquidity for cross listed firms within East African Community, with the domestic market being the Nairobi Securities Exchange. A census was carried out for Kenyan listed firms that have cross-listed into other EAC exchanges in the last five years. Secondary data was collected from the NSE data base. Stock traded volume and turnover were used as proxy measures of stock liquidity. Their means were calculated pre- and post- cross-listing and tested for significance using a paired T-test at five percent level. Most of the results were not statistically significant. Stock liquidity improved for Equity Bank, Nation Media Group and Centum Investments measured by traded volume with that of Equity Bank and Centum being statistically significant. Kenya Commercial Bank stock liquidity declined after cross-listing, though the decline was not statistically significant. Stock liquidity measured by turnover improved for Nation Media Group and Centum shares, while it declined for Equity Bank and Kenya Commercial Bank shares after cross-listing. Again, only results for Centum was statistically significant. Overall, stock liquidity improved for Nation Media Group and Centum shares, while it declined for Equity and Kenya Commercial Bank shares. Generally, it can be concluded that cross-listing improves a firm’s stock liquidity both positively and negatively according to the measure of liquidity utilized, although in most cases that impact was not statistically significant. Based on these findings, the study recommends that corporate managers should consider cross-listing for other reasons such as penetration of new markets but not to improve their stock liquidity.},
 year = {2015}
}

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TY - JOUR
T1 - Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community
AU - Stephen Matheka Makau
AU - Samuel Owino Onyuma
AU - Agatha Nabwire Okumu
Y1 - 2015/03/03
PY - 2015
N1 - https://doi.org/10.11648/j.jfa.20150301.12
DO - 10.11648/j.jfa.20150301.12
T2 - Journal of Finance and Accounting
JF - Journal of Finance and Accounting
JO - Journal of Finance and Accounting
SP - 10
EP - 18
PB - Science Publishing Group
SN - 2330-7323
UR - https://doi.org/10.11648/j.jfa.20150301.12
AB - The purpose of this study was to examine the impact of cross listing on share liquidity for cross listed firms within East African Community, with the domestic market being the Nairobi Securities Exchange. A census was carried out for Kenyan listed firms that have cross-listed into other EAC exchanges in the last five years. Secondary data was collected from the NSE data base. Stock traded volume and turnover were used as proxy measures of stock liquidity. Their means were calculated pre- and post- cross-listing and tested for significance using a paired T-test at five percent level. Most of the results were not statistically significant. Stock liquidity improved for Equity Bank, Nation Media Group and Centum Investments measured by traded volume with that of Equity Bank and Centum being statistically significant. Kenya Commercial Bank stock liquidity declined after cross-listing, though the decline was not statistically significant. Stock liquidity measured by turnover improved for Nation Media Group and Centum shares, while it declined for Equity Bank and Kenya Commercial Bank shares after cross-listing. Again, only results for Centum was statistically significant. Overall, stock liquidity improved for Nation Media Group and Centum shares, while it declined for Equity and Kenya Commercial Bank shares. Generally, it can be concluded that cross-listing improves a firm’s stock liquidity both positively and negatively according to the measure of liquidity utilized, although in most cases that impact was not statistically significant. Based on these findings, the study recommends that corporate managers should consider cross-listing for other reasons such as penetration of new markets but not to improve their stock liquidity.
VL - 3
IS - 1
ER -

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Author Information

Stephen Matheka Makau

Faculty of Commerce, Egerton University, Nakuru, Kenya
Samuel Owino Onyuma

School of Business, Laikipia University, Nyahururu, Kenya
Agatha Nabwire Okumu

Finance Department, Safaricom Ltd, Nakuru Retail Centre, Kenya

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Plain Text BibTeX RIS

APA Style

Stephen Matheka Makau, Samuel Owino Onyuma, Agatha Nabwire Okumu. (2015). Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community. Journal of Finance and Accounting, 3(1), 10-18. https://doi.org/10.11648/j.jfa.20150301.12

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ACS Style

Stephen Matheka Makau; Samuel Owino Onyuma; Agatha Nabwire Okumu. Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community. J. Finance Account. 2015, 3(1), 10-18. doi: 10.11648/j.jfa.20150301.12

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AMA Style

Stephen Matheka Makau, Samuel Owino Onyuma, Agatha Nabwire Okumu. Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community. J Finance Account. 2015;3(1):10-18. doi: 10.11648/j.jfa.20150301.12

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@article{10.11648/j.jfa.20150301.12,
  author = {Stephen Matheka Makau and Samuel Owino Onyuma and Agatha Nabwire Okumu},
  title = {Impact of Cross-Border Listing on Stock Liquidity: Evidence from East African Community},
  journal = {Journal of Finance and Accounting},
  volume = {3},
  number = {1},
  pages = {10-18},
  doi = {10.11648/j.jfa.20150301.12},
  url = {https://doi.org/10.11648/j.jfa.20150301.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20150301.12},
  abstract = {The purpose of this study was to examine the impact of cross listing on share liquidity for cross listed firms within East African Community, with the domestic market being the Nairobi Securities Exchange. A census was carried out for Kenyan listed firms that have cross-listed into other EAC exchanges in the last five years. Secondary data was collected from the NSE data base. Stock traded volume and turnover were used as proxy measures of stock liquidity. Their means were calculated pre- and post- cross-listing and tested for significance using a paired T-test at five percent level. Most of the results were not statistically significant. Stock liquidity improved for Equity Bank, Nation Media Group and Centum Investments measured by traded volume with that of Equity Bank and Centum being statistically significant. Kenya Commercial Bank stock liquidity declined after cross-listing, though the decline was not statistically significant. Stock liquidity measured by turnover improved for Nation Media Group and Centum shares, while it declined for Equity Bank and Kenya Commercial Bank shares after cross-listing. Again, only results for Centum was statistically significant. Overall, stock liquidity improved for Nation Media Group and Centum shares, while it declined for Equity and Kenya Commercial Bank shares. Generally, it can be concluded that cross-listing improves a firm’s stock liquidity both positively and negatively according to the measure of liquidity utilized, although in most cases that impact was not statistically significant. Based on these findings, the study recommends that corporate managers should consider cross-listing for other reasons such as penetration of new markets but not to improve their stock liquidity.},
 year = {2015}
}

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