Extant literature has globally demonstrated two anomalies of initial public offering stocks performance: positive initial returns and long run underperformance. Kenya’s IPO market is experiencing a downward trend. The last issue was in 2015. Bond market has gained traction compared to equity market. Studies have associated firm specific factors to IPO stocks performance and ignored the moderating variable of automation. The study analysed the relationship between firm ownership, board composition and IPO stocks performance at NSE. The percentage of shares owned by the Kenyan government was used to measure firm ownership and board composition was measured by percentage of executive board members to total board members. The performance of IPO stocks was measured using both Cumulative Abnormal Returns and Buy and Hold Abnormal Returns. Automation was measured by IPO stocks performance between pre and post automation period. The sample size was 15 firms which floated shares between 1994 and 2019 with 2,586 observations. Secondary source was used to collect data. Longitudinal and descriptive study designs were used together with multiple linear regression to analyse the data. To determine between fixed and random effects, the study used Hausman test. It was established that both firm ownership and board compositions correlated negatively with IPO stocks performance. Automation on the other hand was positively correlated with board composition but did not correlate with firm ownership. This study will assist the Kenyan government in developing financial stability measures and investors in making informed decisions.
Purpose: The main purpose of the study was to analyze the relationship between board size and the earnings quality of non-financial firms listed on the Nairobi Stock Exchange (NSE) and also determine the effect of board size on earnings quality with ownership concentration as moderating variable. Methods: A positivist research philosophy was adopted and a quantitative research design was employed. The target population of the study was the 39 non-financial companies listed in NSE as of 31st December 2020. Secondary data was the main source of information for the study. The data was s panel type of data based on a period of 13 years (2008-2020). Positivism research philosophy and quantitative research design were employed in the study. Data were analyzed based on the panel regression model. Both diagnostic and specification test for the model applied was conducted. Results: The study established that board size had a significant effect on the earnings quality of non-financial firms listed at the NSE in the presence and absence of ownership concentration as moderator. Further, the results showed that the model with a moderator was superior to that without a moderator. Implications: The non-financial firms listed in NSE should closely examine the criteria used in determining the size of the board and its composition to ensure that boards are more independent and diversified. This will reduce incidences of earnings manipulations and ensure that the directors are accountable to the shareholders which in turn will lead to improvement of investor confidence.
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