Factors Influencing Individual Investor Behaviour during Initial Public Offers (IPOs) in Kenya

Abstract

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