Factors influencing individual investor behaviour during initial public offers in Kenya

Abstract

Kenyan equity market exhibits trends of over-subscriptions during Initial Public Offer (IPO) in the recent years. Though the profit gains in IPOs are dismal in the short run and majority of Kenyan retail investors are also short term, there still exists a market rush whenever there is an IPO issue. Descriptive research design was applied during this survey which involved interviewing the retail investors at Nairobi Securities Exchange (NSE). The study established that investors feel awareness is the most important factor before making investment decision. Adoption of internet and mobile marketing and awareness program will enhance the public knowledge on IPO and investment at the stock exchange. In general, it has been observed that women are more risk averse than men, the young are more risk seeking than the old, wealthier individuals manifest a greater willingness to invest in equities and the poor are risk averse. Access to information about the performance of companies was suggested to be the key element in stakeholder recognition of a company’s share index performance. Internet is increasingly important since the web gives better and freer exchange of information. Finally, Capital Market Authority (CMA) should put in place stringent regulations to protect retail investors from fraudulent and unhealthy practices in the market.