Journal Screenshot

International Journal of Academic Research in Accounting, Finance and Management Sciences

Open Access Journal

ISSN: 2225-8329

Effects of Use of Derivatives on Financial Performance of Companies Listed in the Nairobi Security Exchange

Luyali Newton Chanzu, Mouni Gekara

http://dx.doi.org/10.6007/IJARAFMS/v4-i4/1238

Open access

This study investigated the effects of use of derivatives on financial performance of companies listed in the Nairobi Securities Exchange (NSE). The objectives were; to determine how risk management, efficiency, price stabilization and price discovery in derivatives affect the financial performance of companies in NSE. This study targeted 11 companies that are listed in the NSE trading in the derivative market. Questionnaire was used to collect data from finance officers of the 11 companies listed and NSE officers. The data collected was analyzed by use of descriptive and inferential statistics. Qualitative responses were analyzed using content analysis. A correlation analysis was carried out to determine the performance of the companies listed in the NSE during the pre- and post- adoption of the financial derivatives by these companies. The findings indicated that apart from price stabilization other variables contributed positively to the financial performance of companies listed in NSE.