Electronic stock trading, investor behavior and the performance of Uganda Securities Exchange.

Abstract

The purpose o the study was to examine the relationship between electronic stock trading, investor behavior and performance of the Uganda Securities Exchange. The interest in this study was a result of declining performance in turnover/ trading volume of firm stock on the exchange as indicated in the Monitor, January 2013. The study therefore sought to establish whether if this could be attributed to the investor behavior and not adopting Electronic Stock Trading. A cross sectional survey design was used to undertake this study using a sample of 30 firms from which a response rate of 76.7% was achieved. A self- administered questionnaire was used to collect the data for the study. The data was collected and subjected to rigorous data processing and analysis using SPSS 20. The findings of the study reveal a positive relationship between Electronic Stock Trading, investor behavior and performance of Uganda Securities Exchange. The results further revealed that Electronic Stock Trading is a higher significant predictor of performance and followed by investor behavior. The findings revealed that the model could only predict about 39.1% variation in the performance of Uganda Securities Exchange. This implies that there are other factors that greatly affect performance by about 60.9% The study thus recommends that the Uganda Securities Exchange and the firms should improve on technology used by embracing and operationalising the use of Electronic Stock Trading because this has a positive impact on improving trading volume/ turnover, increasing the market depth and liquidity among others.