Factors Affecting Post-Initial Public Offer Share Prices in Kenya (A Case Study of the Nairobi Stock Exchange

Abstract

The objective of the study was to establish the factors affecting post-IPO share prices of quoted companies in the Nairobi Stock Exchange. The factors, namely, Information about the company, the economic conditions in the country, dividend policy of the company; and the number of shares issued. A survey was carried out to establish how the above factors affect post IPO share prices. Further information relating to post IPO shares and price movements of the companies surveyed was obtained from the NSE and the companies’ websites. Each of the eight company’s shares price movements was evaluated against the four factors with the objective of establishing the role each factor on the price movements. Findings of the study established that the four factors greatly affect the post-IPO share prices. The respondents to the study provided further information on other factors that also influence share prices in the stock market. The study concludes that the post-IPO shares prices are greatly influenced by the four factors studied. The study recommends that companies intending to issue IPOs to be conducting surveys to establish how the above factors would influence the post-IPO share prices. It is further recommended that companies that have issued IPOs and their share prices are not performing well should evaluate how the factors are affecting the company’s share prices in the market and decide how they can influence the share prices positively to improve investor confidence.