Factors Influencing Share Price Prior To An Intfial Public Offer And Their Effect To Individual Investors: A Case Study Of Nairobi Stock Exchange

ABSTRACT

The general objective of this study was to investigate and understand the factors that

influence share price manipulation prior to an IPO, effects of this to individual investors

and the subsequent effect to the Nairobi Stock Exchange.

The Researcher employed four research objectives this were Assessing how poor or lack

of information within the individual investors influenced the process of shares pricing,

Assessing how dysfunctional rules and regulations of the NSE and CMA were

influencing the valuation of shares prior to an IPO, Investigating whether the conflict of

interest within the major shareholders lead to the manipulation of share prices and

Assessing whether increased entry of new investors influenced the process of pricing

shares. To achieve these objectives the researcher sampled 80 respondents across some

brokerage firms (Suntra Investment Bank, CFC financial services, Faida Securities,

Ngenye Kariuki and Sterling Securities) that are associated with the NSE and CMA

which are the two regulatory bodies.

The major finding of the study was that dysfunctional rules in the CMA and NSE,

increased number of new entrants, poor or lack of information by the investors and a low

number of stock options are the factors influencing the activity of pricing of shares and

all these might eventually lead to investors shying away from the IPO's and thereafter the collapse of the Nairobi Stock Exchange.

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