International Journal of Multidisciplinary Research and Development

International Journal of Multidisciplinary Research and Development


International Journal of Multidisciplinary Research and Development
International Journal of Multidisciplinary Research and Development
Vol. 3, Issue 9 (2016)

Motives and challenged of IPOs: A study with reference to Ethiopian companies


Prof. K Sambasiva Rao, Yonas Sendaba Nemera

Equity financing is a one way of obtaining capital that entails giving up a partial interest in the company to investors by selling equity shares. Initial public offering (IPO), as one way raising equity capital so as to finance firmís operation the main objective of this study is to identify factors motivating companies going public and challenges they have faced in the process. Examining motivational factors for firms IPOs and challenges faced is vital in pointing out issues that may require the scrutiny of policy makers. Our research is descriptive in its nature it only tries to explain what is there only. We have collected our data using structured questioner. After coded the data has been analyzed using SPSS version 20. We used descriptive statistics such as frequency and percentages, mean, and one sample t-test. We have found that the leading cause for establishing the company is the prevailing demand- supply gap on the product or service it is going to produce; high financial demand of the project, lowering coast of capital and enhancing bargaining power, broadening the public base of the company, are the leading factors motivating companies to issue shares so that they can raise required capital and start operation. With respect to challenges, investors low interest, low potential to invest in shares, and their poor understanding about investing in shares, absence of trained stock brokers and stock exchange are the four highly rated challenges in the IPO process.
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How to cite this article:
Prof. K Sambasiva Rao, Yonas Sendaba Nemera. Motives and challenged of IPOs: A study with reference to Ethiopian companies. International Journal of Multidisciplinary Research and Development, Volume 3, Issue 9, 2016, Pages 140-146
International Journal of Multidisciplinary Research and Development International Journal of Multidisciplinary Research and Development