MCOM Theses and Dissertations (2010)

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Browsing MCOM Theses and Dissertations (2010) by Author "Dr. Nelson Waweru"

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    The Determinants of the choice of different accounting methods by companies quoted on the Dar es Salaam stock exchange: Positive accounting theory approach.
    (Strathmore University, 2010) Ntui, Ponsian Prot; Dr. Nelson Waweru
    This study examines the factors that determine the choice of multiple accounting methods (policies) in Tanzania. The study investigates managers’ decisions to choose accounting methods in a positive accounting theory perspective using panel data on 15 companies listed on the Dar es Salaarn Stock Exchange (DSE) from 2005 to 2008. Data (accounting numbers and accounting policies) were extracted from the companies’ annual reports. Possible determinants of the choice of accounting methods are identified based on the positive accounting theory, including firm size, leverage, effective tax rate, bonus plan, internal financing, corporate governance, bank loans, ownership dilution and labour force. Using regression analysis, the empirical results show that the significant factors are company size, internal financing, corporate governance and labour force. Contrary to the outcome of prior studies, the study finds that company size and internal financing are positively related with income strategy. The study proves statistically that there is a strong association between choice of accounting methods and income strategy. This study makes several contributions to the body of knowledge. First, in the 1’anzanian context, it delennines the factors which affect choice of accounting methods. Second, 16 potential factors are identified from dilTerent studies and 9 tested in one country (Tanzania). Third. the study identifies corporate governance as a new factor impinging on the choice of accounting policies. Fourth, this study shows for the first time that the use of RATIO of income increasing accounting policies to total number of accounting policies can be used as dependent variable. Finally, the study proves statistically the existence of an association between choice of accounting methods and income strategy in Tanzania. The research concludes that there are behavioural differences between managers of developed countries and their counterparts in Tanzania as a developing nation. Economic, social and political differences affect managers’ behaviour in making decisions. Although there are differences between developed and developing countries such as Tanzania, the research finds specific areas of diversion in the choice of accounting methods as company size, bonus plan and internal financing. Future researchers should use cross-sectional data, test foreign political costs, managers’ discretion, audit committee and industry. They should use natural logarithm of total sales as a measure instead of natural logarithm of total assets. Further, they need to investigate relevance of options in choosing accounting policies.
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    Stock splits and their effect on share prices : study of firms listed at the Nairobi stock exchange
    (2012-02-27) Munyao, John Mwendwa; Dr. Nelson Waweru
    The relationship between stock splits and stock prices has been the subject of continuing interest to economists and practitioners. The reaction occurring after the announcement, however, has not been fully understood and explained. Naidu (2008), states that theoretically, a stock split is merely a numerical change, which leaves investors no better or worse off than they were before the split. This implies that there must be some benefit, either real or perceived, that results from a firm splitting its stock. The purpose of this research was to determine whether a stock split announcement had an impact on the related stock price with specific reference to companies listed at the Nairobi Stock Exchange. The specific objectives were to determine motivation behind stock splits within the Kenyan market; and to determine if stock splits have any effect on the share price. Primary and secondary data was used to achieve the research objectives. Primary data was obtained by conducting interviews with key decision makers in companies that had split their stocks and were listed at the Nairobi stock exchange. Secondary data was collected from the database of the Nairobi stock exchange. Analysis was done using Microsoft Excel and SPSS computer programs and output presented using appropriate visual techniques, i.e., tables, graphs and charts. Studies by various scholars like Lyroudi et al (2006) are consistent with findings of this research especially on the trading range hypothesis. Baker & Powell (1993) agree on the reason why stock splits occur. They agree that most splits occur so that shares prices are brought to an optimal range. The study established that most companies undertook stock splits so as to bring the trading range of the share price to an optimum point. This was undertaken so that the majority of investors, both individual and institutional, could have access to the shares of the company. The study further established that other factors such as the split ratio employed, for instance the fact that most companies at the Nairobi stock exchange employed a 10 for 1 ratio could have an effect on the post split share price.