EFFECT OF SELECTED FACTORS OF A FIRM ON INITIAL PUBLIC OFFER PRICING IN KENYA
Keywords:
Initial Public Offering, Post IPO ownership retention, Age of the Firm, Firm size, Board CompositionAbstract
Purpose: The purpose of this study was to analyse the effect of selected factors of a firm on IPO pricing in Kenya.
Methodology: This study adopted a descriptive design. This descriptive research design was preferred because the study needed to establish the effect of selected factors of a firm on IPO pricing in Kenya. The study targeted a population of all the 56 firms listed at the Nairobi Security Exchange as at 31.12.2011. A census methodology of the 56 firms was used. Secondary data relating to IPO pricing, post IPO ownership and retention, firm size, board composition and age of firm was also collected. SPSS version 17 was used to produce frequencies, descriptive and inferential statistics.
Results: Results indicated that Post-IPO ownership retention played a role in valuation process of IPO. Results revealed that firm size had a significant impact on IPO price. The findings also indicated that board composition positively affected the IPO price. In addition, both the age of the firm and past earnings have a positive effect on IPO price.
Unique contribution to theory, practice and policy: Results indicated that Post-IPO ownership retention played a role in valuation process of IPO. Results revealed that firm size had a significant impact on IPO price. The findings also indicated that board composition positively affected the IPO price. In addition, both the age of the firm and past earnings have a positive effect on IPO price.
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