Stock market participation in less developed countries: a perception-based evidence from Uganda
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Date
2022
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Cogent Business & Management
Abstract
This study aims to examine the contribution of participation costs (floatation
costs, compliance costs and marketing costs) to stock market participation
using evidence from Uganda—a developing country. Using a cross-sectional and
correlational research design, data were collected through a questionnaire survey of
219 small and medium enterprises. We used correlation coefficients and linear
regression to test our hypotheses. The hierarchical regression analysis results suggest
that participation costs such as floatation costs, compliance costs, and marketing
costs are significant predictors of stock market participation while firm age
and firm size (control variables) are non-significant. The study uses a cross-sectional
research design. The major weakness with cross-sectional research designs is that,
it is difficult to monitor changes in behavior over time. To the practitioners and
policymakers, this study suggests that the Ugandan Capital Market Authority should
review the costs (floatation costs, compliance costs, and marketing costs) involved
in accessing finance through the stock exchange. This will go a long way in making
the stock market an alternative financing option, especially in this era of rising costs
of capital provided by other financial intermediaries. The study examines the
behavior of the elements of participation costs in explaining stock market participation,
an aspect that has not been adequately highlighted in previous studies.
Results indicate that among elements of participation costs, floatation costs are
more significant, followed by compliance costs. Market costs turnout to be the least
participation cost in explaining stock market participation.
Description
Keywords
Stock market participation, Floatation costs, Compliance costs, Marketing costs, Uganda
Citation
Zainabu Tumwebaze, Laura Orobia, Juma Bananuka, Caroline Bonareri Tirisa & Aminah Balunywa (2022) Stock market participation in less developed countries: a perception-based evidence from Uganda, Cogent Business & Management, 9:1, 2122161, DOI: 10.1080/23311975.2022.2122161