Effect of Operating Cash Flow on Stock Return of Firms Listed In Nairobi Security Exchange

Abstract

The main aim of the paper was to establish the effect of operating cash flow on stock return of firms listed in NSE. The study was informed by Free Cash Flow (FCF) theory. Census survey was adapted to review financial statements for 29 listed non-financial firms at NSE that had consistent data for all the study variables. Secondary data was extracted for 12 years from 2007-2019 with the aid of a data collection sheet. Explanatory research design which is panel in nature was followed by this study. Both descriptive and inferential statistics were used in data analysis. Panel data regression was used to make inferences and test research hypothesis. Fixed and Random effects methods were used to analyze the balanced panel data using STATA statistical package and Hausman test established that Random effect model was the most ideal method to analyze data in this study. The findings indicated that operating cash flow positively and significantly influenced the stock returns for firms listed at NSE. The study concludes that operating cash flow information affects stock returns. Therefore, the study advocates for firms to increase their levels of operating cash flows through prudent utilization of cash resources since it enhances the stock returns.

Determinants of Stock Return in Consumer Non-Cylicals' Companies Listed on Idx

“…This research replicates the study of Kipngetich et al [1], which examines the impact of operating cash flow toward stock return. This study has several differences with previous research.…”

“…This study has several differences with previous research. First, this study uses consumer non-cyclicals sector companies which is listed on the Indonesia Stock Exchange, while the industrial sector used in Kipngetich et al [1] is nonfinancial companies listed on the Nairobi Security Exchange. Second, the period of this research is from 2018-2020, while the research period of Kipngetich et al [1] is from 2007-2019.…”

“…First, this study uses consumer non-cyclicals sector companies which is listed on the Indonesia Stock Exchange, while the industrial sector used in Kipngetich et al [1] is nonfinancial companies listed on the Nairobi Security Exchange. Second, the period of this research is from 2018-2020, while the research period of Kipngetich et al [1] is from 2007-2019. Third, there is three additional variable from Nurmayasari et al [2], which is return on equity, earnings per share, and debt-to-equity ratio.…”

Manajemen laba model jones dimodifikasi dan arus kas operasi terhadap keputusan investasi pada sektor aneka industri di BEI setelah implementasi IFRS

“…Sehingga setiap investor dapat tertarik untuk melakukan penanaman investasi pada suatu perusahaan yang berdampak pada meningkatkan nilai dan harga pada sahamnya. Collins et al (2014) dan Kipngetich et al (2021) telah melakukan penelitian dan memperoleh hasil bahwa pada arus kas operasi dapat berpengaruh terhadap harga saham yang ada di perusahaan. Berbeda dengan penelitian Oktari & Sunarsih (2020) dan Sitorus et al (2021) yang keduanya memperoleh hasil arus kas operasi tidak dapat memberikan pengruh harga saham suatu perusahaan.…”

“…Hal tersebut dapat memberikan dampak dalam meningkatnya nilai suatu perusahaan dan harga pada saham. Kipngetich et al (2021), Jintaviwatwong et al (2013), dan Perdamenta (2016) memberikan pernyataan mengenai arus kas operasi sehingga dapat memberikan pengaruh terhadap harga saham yang ada pada suatu perusahan. Investor telah menggunakan informasi berupa laporan arus kas yang digunakan untuk mengambil sebuah keputusan dalam berinvestasi.…”