Initial Public Offering (Ipo) Readiness in Ethiopia: Assessing Regulatory Framework, Corporate Governance, Financial Literacy & Technological Challenges
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Date
2025-08
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Addis Ababa University
Abstract
This study investigates the IPO (Initial Public Offering) readiness of companies in Ethiopia, focusing on the regulatory framework, corporate governance practices, financial literacy levels, and technological barriers that may impact their ability to successfully undertake an IPO. Employing a mixed-methods approach, the research combines quantitative data collected through questionnaires and analyzed using descriptive statistics (frequency distributions, percentages, means, and standard deviations) in SPSS 20, with qualitative data gathered from semi-structured interviews. The target population comprises Chief Finance Officers (CFOs), Chief Executive Officers (CEOs), General Managers, Deputy General Managers, Finance Managers, and Chief Accountants from selected large taxpayer share companies and private limited companies within the manufacturing, banking, and insurance sectors in Ethiopia. A stratified random sampling technique, using Yamane's formula, was used to determine a sample size of 129 respondents. Primary data was collected through questionnaires with both open and closed-ended questions, and face-to-face interviews. Secondary data was obtained from sources such as the National Bank of Ethiopia, the Capital Market Authority, academic journals, and relevant financial proclamations and policies. The result of this study revealed the lack of compliance with international IPO standards, insufficient transparency in financial discloser, weak investor protection mechanisms, lack of independent oversight on board of directors, limited understanding of investment process among potential investors, insufficient education on risk and benefit of IPOs, lack of integration between technological platforms used in the IPO process, cyber security concerns that jeopardize sensitive information. The study recommended regulatory reform, enhancing corporate governance, improving financial literacy, addressing technological barrier and strengthening the IPO ecosystem. The research contributes to the understanding of factors influencing IPO decisions in emerging economies and provides practical guidance for companies considering going public in Ethiopia
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IPO, Ethiopia, Regulatory framework, Corporate Governance, Financial Literacy and Technological Barrier