| dc.description.abstract | The main purpose of this study was objectively to establish the challenges faced by Commercial Banks in underwriting Initial Public Offering in Kenya. Specific objectives addressed the role of Commercial Banks in Initial Public Offerings (IPOs,) effects of under pricing and over pricing and procedures preferred to avoid the risks involved in IPOs. The study adopted a descriptive survey design and targeted all 43 main Commercial Banks in Kenya. All management staff were targeted but one top management and one supervisory manager were selected from each Bank.
Purposive sampling method and simple random sampling techniques were used to arrive at 86 respondents for the study. Data was collected by use of questionnaires and interview schedules. Both structured and unstructured questions were constructed for the data. Data collected was analyzed using Statistical Package for Social Sciences programme (SPSS). Descriptive statistics and frequency distributions were used. The results were presented in tables, charts and graphs. The study findings revealed that the major role of Commercial Banks in IPOs is underwriting, , though not all banks offered finances for {POS. Under pricing created oversubscription, incompetence, refund problems and delay in IPO results.
Overpricing contributed to low subscription, unsold security and delay in IPO timing. Intermediation/under writing was the best method to approach IPOs due to the risks involved. Commercial Banks faced challenges of risk taking on behalf of the investors. The sample size was small in terms of the sizes of staff in Commercial Banks and questionnaires also did not allow for further interviews to give more information. These were the limitations. The researcher suggested that a further study be done to capture organizations which under write IPO's and are not Commercial Banks to compare and confirm results of this study. | en_US |
