Determinants of IPO readiness in emerging markets: the case for Ugandan firms

Samuel Sejjaaka

Macroeconomics and Finance in Emerging Market Economies, 2011, vol. 4, issue 2, 269-288

Abstract: The purpose of this study was to identify determinants of initial public offers readiness in large firms that have not yet sought to raise capital through a stock market. Following a series of focus group discussions, a conceptual framework is developed to determine micro determinants of initial public offers readiness. Since the firms face the same set of macro and market constraints, these are taken as a constant. The micro determinants are then regressed against a set of criterion indicators using logistic and multinomial logistic regression models and panel data collected from 35 firms for the financial years 2003--7. The fitted models show that age, level of disclosure, legitimacy of the board (inclusion of independent non-executive directors), and level of market activity (information asymmetry) are significant determinants of initial public offers readiness of the firm. Also, firms in Uganda do not meet most of the criteria for listing because they have not taken the requisite steps to improve governance by separating roles of the CEO and chairman, publishing accounts, and reducing single party control of their boards or making their shares transferable. This study provides empirical evidence of the direction policy formulation should take in order to grow and deepen financial markets in emerging or underdeveloped economies.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:taf:macfem:v:4:y:2011:i:2:p:269-288

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DOI: 10.1080/17520843.2011.593906

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