Quality of Listing Firms in Equity Primary Market in Kenya

Samuel Kinyuah

Journal of Accounting and Finance in Emerging Economies, 2024, vol. 10, issue 2, 177-188

Abstract: Purpose: Kenya has experienced a drought in initial public offerings (IPOs) since 2014. Among varied causes of IPO Drought is decline in demand of IPO shares by retail investors. This paper assert decline in demand is partially attributed to low-quality listings in the past that underperformed in both short- and long-run. Design: The paper investigated quality of listing firms at the time of listing on all IPOs made between 2000 to 2014 in Nairobi Securities Exchange using various dimensions.Findings: The results revealed most of listing firms lacked growth opportunities, reported weak financial performances and engaged in earnings managements. Liberal listing guidelines aiming at attracting firms to list in numbers led to low-quality offerings.Implication: Strategy of liberal listing requirements is counterproductive as demand for the listings keep shrinking due to low-quality of listed firms that underperform in long-run. The study recommends reviewing of listing requirements so that only high-quality firms are allowed to list to keep the market vibrant. As long as low quality offerings are allowed, retail IPO investors will keep off the market as they suffer adverse selection costs

Keywords: Low-quality listings; Earnings Management; Growth Opportunities; Financial Efficiency (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/2982/1742 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:src:jafeec:v:10:y:2024:i:2:p:177-188

DOI: 10.26710/jafee.v10i2.2982

Access Statistics for this article

More articles in Journal of Accounting and Finance in Emerging Economies from CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan Contact information at EDIRC.
Bibliographic data for series maintained by Rabia Rasheed ().