Growth versus value investment a case of Nairobi Stock Exchange

Abstract

In making investments, investors will always wish to employ strategies that will realize superior performance. One of the most important developments in equity management in the last several years is the creation elf portfolio strategies based on value-oriented and growth-oriented strategies, where value stocks have been defined as stocks with a higher of either earnings yields, book-market value, dividend yield, or cash flow to price ratio, and growth stocks as those with a low of these ratios.

In markets around the world, value stocks have been shown to show superior performance than growth stocks except during the later Part of the 1990s. This study seeks to find out whether value stocks outperform growth stocks at the Nairobi Stock Exchange, if stocks are categorized into value and growth stock on the basis of earnings yield, price earning, book-to-market value, cash flow to price and dividend yield.