Dynamics in the Business Environment: Effect of the Building Bridges Initiative on Performance of Nairobi Securities Exchange, Kenya

Abstract

Abstract: Political elections worldwide create tense moments in the business environment, this tends to erode investor confidence as a result of optimism and pessimism from the public. Market bulls represent optimism while market bears pessimism. Market optimism results in higher stock returns while market pessimism in lower stock returns. Kenya had its hotly contested general election on 8th August 2017, which had a negative impact to the business environment. This was followed a political handshake between the two main competitors of the general election in trying to foster a conducive political-business environment that would result in improved investor confidence. This paper investigates whether the Handshake between the president elect and the main opponent in Kenya had statistically significant effect on the Nairobi Securities Exchange Index. The design of this paper is descriptive based. The Nairobi Securities Exchange (20) index data will be obtained 42 days before and 42 days after the handshake. The mean indices will be computed and tested for statistical significance. The independent variable is the handshake while the indices before and after the handshake are the dependent variables. The results will be tested at 0.05 level of significance. Keywords: Nairobi Securities Exchange Index, Handshake, market optimism, market pessimism