An investigation into the challenges affecting cross listing of public listed companies in East Africa community
Egondi, Obinga Patrick
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The purpose of the research was aimed at providing background on the current status of capital market integration with an analysis on the public listed companies in East Africa in relation to cross listing. Specifically the study investigated the challenges of cross listing of the public listed companies in the region adopting a descriptive design. Literature published in the area was reviewed on the existing relationships concerning the cross listings and found the existence of slow pace and few cross listings. Stratified and Quota Sampling techniques were used to study the companies and collecting primary data through questionnaire was administered by the researcher. Collected data was analyzed using Descriptive Statistics and MS Excel for simple data analysis to identify the relationship. The study specifically investigated how firm-level, socio economic environment and institution-level factors limits the choices of whether and where to cross-list. Regarding the influence of firm-level characteristics, the study reveals that majority of the public listed firms take into consideration size, foreign sales and not having sizeable tradable goods, and a high level of private benefits. Regarding the effect of institution-level characteristics, the study found that listed firms in East Africa Markets are less likely to cross-list because their markets are faced with illiquidity and inefficiency, poor reputation, high concentration and infrastructure and still dwell on primitive domestic equity market and small to hold such kind of offering. The study identified that social economic variable; Market risk and inefficiency, high liquidity risk, stricter disclosure standards, poor access to capital markets; existence of politically protected markets limits public listed firms from making cross listing decision. The data also indicate no differences in the factors affecting cross-listing decisions across the East Africa Public listed firms according to country. This proves that public listed firms in East Africa are still developing (in the developing economies). The study recommends the need to enhance the efficiency and efficacy of public listed firms in there cross listing decision since it is value enhancing and concludes that cross- listing premium arises from commitments of all parties though Results are inconclusive regarding the impact of private capital flows on cross listing decisions.