The Challenges Of Listing At The Nairobi Securities Exchange By Top 100 Mid Sized Companies’ In Kenya

Abstract

The objective of this study was to establish the challenges of the top 100 midsized companies listing at the N.S.E despite meeting the threshold listing requirements. Listing in the N.S.E is a strategic episode in a company’s life cycle as it enables a listed company access capital at low costs and enhances its global profile. The NSE avails firms an opportunity to access long-haul investable funds by floating company shares and debt securities to the public. The study carried out a census of all the top 100 midsized companies in Kenya. Primary data was collected using self administered questionnaires. The data collected was polished for accuracy, uniformity, completeness and ensure its consistency with the study objectives. The data was analyzed using descriptive statistics with the help of Statistical Package for Social Science (SPSS). The study deliberated on market based and company specific challenges that hindered companies from listing. Under market based challenges, the high cost associated with listing was found to be the most influential challenge. The respondents were of the opinion that the direct initial costs of listings and the indirect costs of ensuring on-going compliance were too high. Stock market volatility also emerged as one of the relatively influential factors as it was highly considered by the respondents. With reference to company specific challenges, the most influential factor was the company structure. Majority of the midsized companies were family owned with concentrated ownership structures whose owners were not ready to relinquish control of their businesses as would be the case with going public. The study further revealed that company age and company size were the least influential factors considered by the respondents in making listing decision. Access to a wide capital emerged as the most motivating listing benefit. This implies that companies would highly consider sourcing funds from the capital markets when in need to finance their business operations. Despite the numerous listing benefits, the study concluded that CMA should lower initial and on-going listing costs and for NSE to broaden the scope of its products.