Revista Internacional de Economia e Ciências de Gestão

Welfare Economics of IPOs: The Deal that Never was, in Kenya

Abstract

Ojwang’ George Omondi

This study sought to determine the economic factors predicting IPO share price volatility at the Nairobi Securities Exchange under the mediating role of regulatory authorities such as the Central Bank of Kenya, Capital Markets Authority, Nairobi Securities Exchange and National Treasury, and the intervening function of Investment banks, commercial banks, brokerage houses, media and politics. Through a correlational research design employing simple regression, the results are contradictory on the economic indicators and their effect on different sectors of the economy. With the exception of Equity bank which showed a positive relationship with interest rates, Foreign exchange, Nairobi Securities All Share Index and Lagged Share Price, KenGen and Safaricom showed no significant relationship with their economic predictors. A reworked model comprising inflation rate, interest rate, foreign exchange rate and money supply captured the overall market prediction with the initial three having negative significance whereas money supply had positive significance as a predictor of share price volatility.