Macroeconomic Effects of Initial Public Offer and Equity Prices of Firms Listed in Nairobi Securities Exchange, Kenya

Abstract

IPO is a crucial step for young enterprises, giving them accessibility to public equity market for the first time. initial public offering under-pricing phenomenon measuring firms’ performance was focused on by previous literature. Though, scholars argued that initial public offering pricing, a crucial factor in under-pricing had not been fully explored in literature. The purpose of the study was to determine the macroeconomic effects of initial public offer and performance equity prices of enterprises listed in NSE, Kenya. The specific objectives were to determine the effect of dividend per share, market capitalization, market liquidity and foreign exchange rates effect on equity prices of NSE quoted companies post IPO. Descriptive design was deployed and 7 NSE listed firms targeted which had issued IPO from 2006-2020. Secondary data obtained from NSE was depended on. Data was analysed by the use of SPSS. From the panel Rho was 0.310 in regression analysis, indicating that 31% of the variance in equity share prices is attributed to variances across listed companies. ' Between and inside R-square, the values are 0.9967 and 0.0154. There was a total R2 of 0.9885, which indicates that the factors evaluated in the model account for around 98.85 percent change in the dependent variables, while the remaining percent change may be due to additional variables not addressed by this model.. Dividend per share improved significantly after the IPO. Dividend per share was also established to improve significantly after the IPO. The study concludes that dividend per share, market capitalization and market liquidity improved in the post going public period because they sold their shares to the public and received proceeds. In addition, the study concludes the first several years after an initial public offering (IPO) benefit companies by going public despite the possibility of increased agency difficulties. Firms that become publicly listed get access to money that aids in the commercialization of their goods.