Macroeconomic Effects of Initial Public Offer and Equity Prices of Firms Listed in Nairobi Securities Exchange, Kenya
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Date
2022
Authors
Muchemi, Wachira Moses
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
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.
Description
A Research Project Submitted to the School of Business in Partial Fulfilment for the Award of Degree of Master of Business Administration (Finance) of Kenyatta University, 2022
Keywords
Macroeconomic Effects, Initial Public Offer, Equity Prices, Firms Listed, Nairobi Securities Exchange, Kenya