Benefits accruing to companies listed at The Nairobi Stock Exchange
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Date
2006Author
Njiraini, Andrew N
Type
ThesisLanguage
enMetadata
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This study sought to find out the benefits that companies listed at the Nairobi
Stock Exchange enjoy. Evidence from research indicates that an increasing
number of companies see going public as a way to improve their reputation
and social capital with beneficial effects on their capacity to access external
resources and opportunities for new entrepreneurial ventures. Previous
research has mainly focused on the long run performance of initial public
offers. Research in different markets has produced different results. No
research has been carried out in Kenya to find out what benefits accrue to
firms listed at the NSE, thus the need for this research.
The population covers all companies that were quoted at the Nairobi Stock
Exchange as at 30 September 2005. The study makes use of primary data.
The data was collected using questionnaires. Questionnaires were subjected
to a statistical analysis of frequency, in order to obtain a relative assessment
of the extent of the different aspects of the listing benefits and crosstabulation
and in order to check for significant differences across various
industry sectors. Factor analysis and principal component analysis were also
used.
The research found out that going public allows firms to access external
fmancial resources. The decision to go public improves the liquidity of a
Company's shares as well as the scope for diversification by the initial
shareholders of the company.. Other benefits realised include positive
public image and better management of quoted companies. It is clear that
companies realise many benefits from listing their shares at the NSE.
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The stock exchange must play an increasingly educational role; the Capital
Markets Authority as the regulatory agency must alter its approach from the
sometimes heavy-handed type of control to a more proactive, creative and
supportive role in order to assist in the creation of a more vibrant and
forward looking capital market environment. This it can do by seeing itself
as a catalyst in development rather than as a traditional regulator of what is a
very small market. o
More companies should consider listing at the stock exchange and enjoy the
benefits that come with listing.
Citation
MBASponsorhip
University of NairobiPublisher
University of Nairobi School of Business, College of Humanities and Social Sciences