The Effects of Listing on Financial Performance of Companies Listed at the Nairobi Securities Exchange
Abstract
In recent times, interest in listing at the stock exchange has assumed high prepositions. This is
probably due to the great push from the developing countries to the African countries to embrace
positive image in order to attract foreign investors and to improve shareholders value. The
general objective of the study was to investigate the effect of listing on the financial performance
of companies listed in the Nairobi stock Exchange. This study utilized four main theories i.e.
market timing theory, capital asset pricing model, arbitrage pricing theory and portfolio theory.
The study used descriptive survey research design with the target population being companies
listed at the Nairobi Securities Exchange between 2002-2012. Secondary Data was collected
from NSE and published financial statements from the companies' websites. Data collected was
analyzed using Chi square test. Findings from the study revealed that the XA2>5.991at 2 degree
of freedom show that the results are statistically significant at 5% significance level. The
research findings indicate that there is negative relationship between listing and firm financial
performance. The implication of these findings is that listing may affect the company's
performance negatively. Further research should be carried on similar studies in Kenya so as to
analyze the impact of listing on financial performance over a longer time-span. Also in the
future, it would be important to investigate to what extent these conditions impact firm
performance.
Key words: Listing, Financial performance
Publisher
University of Nairobi