EFFECT OF TRADING VOLUME ON FINANCIAL PERFORMANCE OF CROSS-LISTED COMPANIES : EVIDENCE FROM THE NAIROBI SECURITIES EXCHANGE

Abstract

The objective of the study was to examine the effect of trading volume on financial performance of cross-listed companies listed at the Nairobi Securities Exchange. An event study methodology was used. The research focused on the all the 7 NSE firms that have been cross-listed. The study proposed to use secondary data which was collected from the NSE. The study found that the trading volume had a positive and significant effect on financial performance of NSE firms before cross listing (β=0.313, p=0.023). The research study concluded that higher trading volumes generally indicate greater market interest, making it easier to execute trades and potentially increasing the likelihood of favorable price movements. Conversely, low trading volume can indicate illiquidity and reduced market interest, potentially leading to lower stock prices and subsequent difficulties in executing stock market trades. The study findings were clear that volume of trade had a significant effect on financial performance of cross listed firms. Therefore to increase trading volume for cross-listed firms, companies should consider reducing minimum trading units, expanding operations, and ensuring strong financial statements. These actions can attract more investors, increase trading volume, and ultimately boost stock value