Sylvester Ndeto Mulwa - Academia.edu (original) (raw)
Papers by Sylvester Ndeto Mulwa
ABSTRACT When going public, firms are faced with the diff... more ABSTRACT
When going public, firms are faced with the difficult decision of how to determine the offer price for their shares. This continues to be a considerable practical and theoretical importance for investors and academicians. However, despite considerable research efforts, IPO valuations are still largely mysterious. First day returns of IPOs tend to be high indicating that there is a downward bias in the offer price compared with the first day price of the shares in the secondary trading market. A large number of IPOs do therefore appear to be under priced. It is well known that initial public offers face numerous challenges in the process of price discovery. This is because the market is usually not certain about the quality of the company while the issuing company does not know the market demand of its shares. This desktop research report seeks to fill this research gap by looking at firm specific determinants affecting IPO under pricing.
This review indentified various factors among them the role of an underwriter, market timing ,net earnings,information asymmetry etc.All the factors play significant role in determining the degree of underpricing.Large number of firm specific factors helps in communicating different information having its implications on the degree of information asymmetry related to the issue and the firm itself. As a result, pricing of initial public offering also gets influenced by these factors
The future research can be focused on modeling the regulatory environment within a given economy with various constraints and linking its relative impact on the degree of underpricing. In addition, the question still remain unaddressed in analyzing the optimal point of going public during different phases of organizational life cycle of a firm operating in a particular industry, contract between the issuer and the underwriter. We conclude this review by agreeing to the fact that IPO underpricing is a complex phenomenon to explain with the help of single generalized theory.
ABSTRACT When going public, firms are faced with the diff... more ABSTRACT
When going public, firms are faced with the difficult decision of how to determine the offer price for their shares. This continues to be a considerable practical and theoretical importance for investors and academicians. However, despite considerable research efforts, IPO valuations are still largely mysterious. First day returns of IPOs tend to be high indicating that there is a downward bias in the offer price compared with the first day price of the shares in the secondary trading market. A large number of IPOs do therefore appear to be under priced. It is well known that initial public offers face numerous challenges in the process of price discovery. This is because the market is usually not certain about the quality of the company while the issuing company does not know the market demand of its shares. This desktop research report seeks to fill this research gap by looking at firm specific determinants affecting IPO under pricing.
This review indentified various factors among them the role of an underwriter, market timing ,net earnings,information asymmetry etc.All the factors play significant role in determining the degree of underpricing.Large number of firm specific factors helps in communicating different information having its implications on the degree of information asymmetry related to the issue and the firm itself. As a result, pricing of initial public offering also gets influenced by these factors
The future research can be focused on modeling the regulatory environment within a given economy with various constraints and linking its relative impact on the degree of underpricing. In addition, the question still remain unaddressed in analyzing the optimal point of going public during different phases of organizational life cycle of a firm operating in a particular industry, contract between the issuer and the underwriter. We conclude this review by agreeing to the fact that IPO underpricing is a complex phenomenon to explain with the help of single generalized theory.
Decision making about dividend payout is one of the most important decision that companies encoun... more Decision making about dividend payout is one of the most important decision that companies encounter with. Dividend payout ratio is dependent on lots of elements such as investing opportunities, profitability, income tax, laws obligation and liquidity. The objective of the study was to determine the relationship between dividend payout ratio and the value of the firm for companies listed at the Nairobi Securities Exchange. The study period was a six year period i.e 2008-2013.This study involved the use of a descriptive research design. Using a sample of 29 listed firms which were randomly selected the study employed secondary data. The population of interest consisted of all the 61 listed firms in Kenya.
This study found that there was a significant relationship between dividend payout ratio and the value of the firm for companies listed at NSE. Except liquidity, the other variables (dividend payout ratio, growth opportunity, and profitability) had a significant impact on the value of the firm since their p-value was less than the accepted critical value. In addition analysis of variance showed that the combined effect of dividend payout ratio, current ratio, liquidity and growth opportunity was statistically significant in explaining changes in value of the firm of listed companies in Kenya. This further implied that the overall model was significant.Correlation coefficient was also used to determine the relationship between the variables and concluded that dividend payout ratio had a positive correlation with the value of the firm. The other variables had also a positive correlation with the value of the firm but liquidity had a very weak relationship compared to other variables. The study recommends that since dividend policy has an effect on the value of the firms quoted at NSE, companies should pay dividends to maintain a high firm value. In carrying out the dividend payout decision, the management should also consider other factors such as liquidity, growth opportunities, current ratio etc since they have an impact on the value of the firm, despite paying dividends consistently and having a clear dividend policy.
ABSTRACT When going public, firms are faced with the diff... more ABSTRACT
When going public, firms are faced with the difficult decision of how to determine the offer price for their shares. This continues to be a considerable practical and theoretical importance for investors and academicians. However, despite considerable research efforts, IPO valuations are still largely mysterious. First day returns of IPOs tend to be high indicating that there is a downward bias in the offer price compared with the first day price of the shares in the secondary trading market. A large number of IPOs do therefore appear to be under priced. It is well known that initial public offers face numerous challenges in the process of price discovery. This is because the market is usually not certain about the quality of the company while the issuing company does not know the market demand of its shares. This desktop research report seeks to fill this research gap by looking at firm specific determinants affecting IPO under pricing.
This review indentified various factors among them the role of an underwriter, market timing ,net earnings,information asymmetry etc.All the factors play significant role in determining the degree of underpricing.Large number of firm specific factors helps in communicating different information having its implications on the degree of information asymmetry related to the issue and the firm itself. As a result, pricing of initial public offering also gets influenced by these factors
The future research can be focused on modeling the regulatory environment within a given economy with various constraints and linking its relative impact on the degree of underpricing. In addition, the question still remain unaddressed in analyzing the optimal point of going public during different phases of organizational life cycle of a firm operating in a particular industry, contract between the issuer and the underwriter. We conclude this review by agreeing to the fact that IPO underpricing is a complex phenomenon to explain with the help of single generalized theory.
ABSTRACT When going public, firms are faced with the diff... more ABSTRACT
When going public, firms are faced with the difficult decision of how to determine the offer price for their shares. This continues to be a considerable practical and theoretical importance for investors and academicians. However, despite considerable research efforts, IPO valuations are still largely mysterious. First day returns of IPOs tend to be high indicating that there is a downward bias in the offer price compared with the first day price of the shares in the secondary trading market. A large number of IPOs do therefore appear to be under priced. It is well known that initial public offers face numerous challenges in the process of price discovery. This is because the market is usually not certain about the quality of the company while the issuing company does not know the market demand of its shares. This desktop research report seeks to fill this research gap by looking at firm specific determinants affecting IPO under pricing.
This review indentified various factors among them the role of an underwriter, market timing ,net earnings,information asymmetry etc.All the factors play significant role in determining the degree of underpricing.Large number of firm specific factors helps in communicating different information having its implications on the degree of information asymmetry related to the issue and the firm itself. As a result, pricing of initial public offering also gets influenced by these factors
The future research can be focused on modeling the regulatory environment within a given economy with various constraints and linking its relative impact on the degree of underpricing. In addition, the question still remain unaddressed in analyzing the optimal point of going public during different phases of organizational life cycle of a firm operating in a particular industry, contract between the issuer and the underwriter. We conclude this review by agreeing to the fact that IPO underpricing is a complex phenomenon to explain with the help of single generalized theory.
Decision making about dividend payout is one of the most important decision that companies encoun... more Decision making about dividend payout is one of the most important decision that companies encounter with. Dividend payout ratio is dependent on lots of elements such as investing opportunities, profitability, income tax, laws obligation and liquidity. The objective of the study was to determine the relationship between dividend payout ratio and the value of the firm for companies listed at the Nairobi Securities Exchange. The study period was a six year period i.e 2008-2013.This study involved the use of a descriptive research design. Using a sample of 29 listed firms which were randomly selected the study employed secondary data. The population of interest consisted of all the 61 listed firms in Kenya.
This study found that there was a significant relationship between dividend payout ratio and the value of the firm for companies listed at NSE. Except liquidity, the other variables (dividend payout ratio, growth opportunity, and profitability) had a significant impact on the value of the firm since their p-value was less than the accepted critical value. In addition analysis of variance showed that the combined effect of dividend payout ratio, current ratio, liquidity and growth opportunity was statistically significant in explaining changes in value of the firm of listed companies in Kenya. This further implied that the overall model was significant.Correlation coefficient was also used to determine the relationship between the variables and concluded that dividend payout ratio had a positive correlation with the value of the firm. The other variables had also a positive correlation with the value of the firm but liquidity had a very weak relationship compared to other variables. The study recommends that since dividend policy has an effect on the value of the firms quoted at NSE, companies should pay dividends to maintain a high firm value. In carrying out the dividend payout decision, the management should also consider other factors such as liquidity, growth opportunities, current ratio etc since they have an impact on the value of the firm, despite paying dividends consistently and having a clear dividend policy.