The Effects of Listing on Financial Performance of Companies Listed at the Nairobi Securities Exchange

Abstract

In recent times, interest in listing at the stock exchange has assumed high prepositions. This is probably due to the great push from the developing countries to the African countries to embrace positive image in order to attract foreign investors and to improve shareholders value. The general objective of the study was to investigate the effect of listing on the financial performance of companies listed in the Nairobi stock Exchange. This study utilized four main theories i.e. market timing theory, capital asset pricing model, arbitrage pricing theory and portfolio theory. The study used descriptive survey research design with the target population being companies listed at the Nairobi Securities Exchange between 2002-2012. Secondary Data was collected from NSE and published financial statements from the companies' websites. Data collected was analyzed using Chi square test. Findings from the study revealed that the XA2>5.991at 2 degree of freedom show that the results are statistically significant at 5% significance level. The research findings indicate that there is negative relationship between listing and firm financial performance. The implication of these findings is that listing may affect the company's performance negatively. Further research should be carried on similar studies in Kenya so as to analyze the impact of listing on financial performance over a longer time-span. Also in the future, it would be important to investigate to what extent these conditions impact firm performance. Key words: Listing, Financial performance