dc.contributor.author | Shamiah, Wyckliffe M | |
dc.date.accessioned | 2013-05-11T08:26:11Z | |
dc.date.available | 2013-05-11T08:26:11Z | |
dc.date.issued | 2006 | |
dc.identifier.uri | http://erepository.uonbi.ac.ke:8080/xmlui/handle/123456789/21760 | |
dc.description.abstract | There have been questions as to why most companies do not raise equity capital
from the public in Kenya by issuing shares even with the increased tax incentives
for such issuers. It has not been clear as to whether the costs of such funds are
prohibitive compared to those of alternatives sources.
No study has been undertaken in Kenya to establish the cost of raising equity
capital from the public. This paper is focused on the cost of raising equity capital
in Kenya. It utilized secondary data on costs and expenses for a sample of 37
issues being both IPOs and SEOs between 1990 and 2005 as published in the
prospectuses, audited financial statements and other source documents obtained
from both the Capital Markets Authority (CMA) and Nairobi Stock Exchange
(NSE),to test the following hypotheses:
1. Average cost of an issue decreases with increase in gross proceeds
2. Average cost of an issue increases with increase in gross proceeds
Analysis results indicate that the average cost of raising equity capital in Kenya
is 10.24% of the gross proceeds. It has also been revealed from the findings that
IPOs are more costly than SEOs and that rights issue-s are cheaper with only 4.5% of the gross proceeds being consumed by direct floatation costs.
On the basis of this analysis it turns out that flotation costs are lower if the issuer
opts to raise high proceeds from the issue thus as far as the economies of scale
view is concerned, there is clear evidence in favor of this view.
On the relationship between direct cost of capital and gross proceeds, regression
analysis was significant that gross proceeds explain changes in direct floatation
costs although other factors exist that may contribute to the change but not on
the same extent as gross proceeds | en |
dc.description.sponsorship | The University of Nairobi | en |
dc.language.iso | en | en |
dc.publisher | University of Nairobi, | |
dc.subject | Direct cost of raising Equity capital and gross proceeds | en |
dc.subject | Companies Listed on the Nairobi stock exchange | en |
dc.title | The Relationship Between Direct Cost of Raising Equity Capital and Gross Proceeds of Companies Listed on the Nairobi Stock Exchange (Nse) | en |
dc.type | Thesis | en |
local.publisher | School of Business ( SOB ) | en |