Citation:

Daniel Wambua Mulinge. "Size of the Firm, Offer Rate, Book Value, And Short-Run Performance Initial Public Offering of Companies Listed in the Nairobi Securities Exchange" International Research Journal of Economics and Management Studies, Vol. 4, No. 5, pp. 1-2, 2025.

Abstract:

The study extensively examines the performance of Initial Public Offerings (IPOs) on the Nairobi Securities Exchange, focusing on short-term price fluctuations following an IPO. Further, IPO performance is evaluated using traditional metrics like first-day price jump, Cumulative Abnormal Returns (CAR), and Market Adjusted Buy and Hold Returns (MABHR). However, these indicators often overlook the unique factors affecting IPO underpricing within a firm. The study uses Signaling Theory, Agency Theory, and Behavioral Finance to explore the correlation between firm size, offer rate, and book value on IPO underpricing at the NSE. It also utilized mini desktop research to review IPO reports, financial statements, and market performance data for firms listed between 2010 and 2020. The study reveals that firm size, offer rate, and book value significantly influence IPO underpricing, providing fresh insights into IPO pricing dynamics, especially in emerging markets. The study enhances understanding of IPO performance, offering valuable insights for issuers, investors, and policymakers to enhance market efficiency and IPO pricing strategies. Finally, it emphasizes the significance of firm-specific characteristics in IPO evaluations and provides practical advice for market participants.

References:

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Keywords:

Offer Rate, Nairobi Security, IPO, MABHR.