Factors underlying the low rate of listing or companies in a stock exchange:
• Undervalued shares
Due to market inefficiency the shares of the companies are at times undervalued based on the market value. This leads to low market value of the company.
• Listing requirement
Stringent conditions have to be met a company to qualify for listing. Some companies have considered this prohibitive.
• Compliance measures
Strict rules and regulations must be complied with the quoted companies. There exists continued scrutiny and surveillance of the quoted companies the Capital Market and the Nairobi Exchange.
• Lack of privacy
A lot of information needs to be disclosed for the quoted companies. The companies are subjected to a lot of public scrutiny. Prospective companies may fear loss of privacy associated with listing.
• Limited and public company requirement.
Only limited and public companies are allowed for listing. A number of companies are private companies and may therefore not qualify.
• Cost of risking – high level of listing (before)