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TOPIC: CAPITAL MARKET OPERATIONS AND RAISING EQUITY IN LISTED COMPANIES

NAME: SEKIZIYIVU ISAAC

REG No: 07/U/14884/EXT

STUDENT’S NUMBER: 207015441

SUPERVISOR: MR KAJUMBULA RICHARD

A RESEARCH PROPOSAL SUBMITTED TO THE COLLEGE OF ECONOMICS AND MANAGEMENT IN PARTIAL

FULFILMENT FOR THE AWARD OF A BACHELOR OF COMMERCE DEGREE, MAKERERE UNIVERSITY.

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October, 2011

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DECLARATION

I do hereby declare that this report is presented in its original form and that it has been

not submitted in Makerere University or any other institution for the award of any degree.

Signature…………………..

SEKIZIYIVU ISAAC

Date…………………………

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APPROVAL

This is to certify that this research report has been under my supervision and hereby

being submitted in partial fulfillment of the requirement for the award of Bachelor of

Commerce, Degree with my approval.

Signed………………………

MR. KAJUMBULA RICHARD

Date………………………….

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DEDICATION

This piece of work is dedicated to my Sweet Mum Mrs. Kiggundu Mary, my dearest Dad

Mr.Kiggundu Haruna my lovely Sisters Nantongo Sarah, Namwala Aisha, Namuli

Mariam, Namirembe Summaya, and My dear Brothers Ssegawa Musa, Kaaya Malik,

Lukwago Rashid, Ssali Ibrahim, Ssentongo Hussein, and. Finally to my friends whose

courage gave me a firm ground on which I stand today to celebrate this success.

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ACKNOWLEDGEMENT

Above all, Special thanks to GOD Almighty for without Him this entire world would not

have been an easy place to stay.

In a special way, I wish to acknowledge the following individuals who have rendered me

an extra ordinary assistance in the production of this work, my supervisor Mr. Kajumbula

Richard who has tirelessly guided me through the whole of this process as well as the

staff of the various organizations that my report was about i.e. CMA, USE, BOBU, UCL

and not forgetting my colleagues under the same supervisor.

I wish to take this opportunity to unveil my most sincere and heart felt appreciation to all

my friends who stood by my side to enable me accomplish this piece of work among

whom include Nakamanya Rehema, Nanteza Doreen, Nanyanzi Jane, Namusoke Stella,

Namayengo Diana, Kanyunyuzi Dorothy, Ronald, Mugenyi Khassim, Kalinaki Hussein,

Mubarak, Abdul, Aisha, Mbwali Fiona, Kagoya Diana, Lukooya Eddy, Ssenyondo John,

Rashida, Hamphfrey, Oloya, Okware, Kato, Nabachwa Madina to mention but a few.

A vote of thanks goes to my dearest relatives My Uncles, Mr. Jumba Manshoor, Mr. Ssali

Yasin My Aunties, Ms Kiggundu Aidah and Mrs. Jumba Winfred for the positive

attitude, financial and moral support they have given me throughout this struggle.

May the Good Lord Bless You All Abundantly.

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TABLE OF CONTENT

Declaration................................................................................................iApproval..................................................................................................iiDedication................................................................................................iiiAcknowledgement.....................................................................................ivTable of content.........................................................................................vAbbreviations..........................................................................................viiAbstract.................................................................................................viii

CHAPTER ONE.........................................................................11.0 Introduction.....................................................................................11.1 Background to the Study.....................................................................11.2 Statement of the Problem....................................................................21.3 Purpose of the Study..........................................................................31.4 Research Objectives...........................................................................31.5 Research Questions............................................................................31.6 Scope of the Study..............................................................................31.7 Significance of the Study.....................................................................4

CHAPTER TWO.........................................................................52.0 Literature Review.............................................................................52.1 Introduction.....................................................................................52.2 Capital Markets................................................................................52.3 Stock Exchange.................................................................................82.4 Raising Equity..................................................................................92.5 Why Small Firms may choose Capital Markets to Finance their Business.....92.6 Relevance of Previous Capital Market Operations Studies.......................102.7 Capital Markets as a Source of Capital for Ugandan Companies..............112.8 Ways of Rising Equity......................................................................112.9 Roles of Security Exchange................................................................112.10 How Capital Market Operations Assist in Raising Equity........................122.11 Relationship between Privatization and Capital Market Operations..........132.12 Relationship between Capital Market Operation and Raising Equity........14

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CHAPTER THREE: METHODOLOGY.............................................163.0 Introduction...........................................................................................................16

3.1 Research Design....................................................................................................16

3.2 Survey Population.................................................................................................16

3.3 Sampling Design....................................................................................................17

3.4 Sample Size............................................................................................................17

3.5 Sampling Procedure.............................................................................................17

3.6 Source of Data.......................................................................................................18

3.7 Personal Interviews..............................................................................................18

3.8 Self Administered Questionnaires.......................................................................19

3.9 Data Processing.....................................................................................................19

3.10 Interpretation........................................................................................................20

3.11 Limitations of the Study.......................................................................................20

CHAPTER FOUR......................................................................214.0 Presentation and Discussion of Researh Findings...................................214.1 Introduction...................................................................................214.2.0 Biobata of Respondents....................................................................214.3.0 Objective One: Capital Market Operations..........................................234.5 Objective Two: Raising Equity...........................................................314.6 The Relationship between Capital Market Operations and Raising Equity. 34

CHAPTER FIVE.......................................................................365.0 Summary, Conclusion and Reconmmendation......................................365.1 Introduction...................................................................................365.2 Summary Of Findings......................................................................365.3 Conclusions....................................................................................375.4 Recommendations...........................................................................37REFERENCES.........................................................................39Appendix I : Questionnaire on Capital Market Operations and Raising Equity in

Listed Companies.....................................................................................41

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ABBREVIATIONS

USE - Uganda Securities Exchange

CMA - Capital Markets Authority

BAT - British American Tobacco

BOBU - Bank of Baroda Uganda

UCL - Uganda Clays Limited

TIEP - Tertiary Institutions Education Program

EEP - Executive Education Program

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ABSTRACT

Following the persistent inefficiency in raising equity as a result of Capital market

operations, a study was conducted to try to establish the relationship between Capital

market operations and raising equity. The objectives of the study were; to asses the effectiveness of Capital market operations, to examine the raising of equity among listed companies and to establish the relationship between capital market operations and raising equity in listed companies.

The study employed an explanatory research design. Both primary and secondary data

sources were used. The primary sources mainly focused on the staff of CMA, USE, BAT,

BOBU and UCL where data was obtained by use of self administered questionnaires and

an interview guide. Secondary data was obtained through document review of text books,

journals, magazines, periodicals reports and other relevant scripts from the library and the

internet.

The results show a high positive correlation between Capital market operations and

raising equity (0.912). The relationship was drawn from the fact that whatever is done in

Capital markets is aimed at improving the level of equity of listed companies.

Basing on the study findings, it is recommended that CMA activities must be widened so as to spread sensitization campaigns to embark on the public awareness and education initiatives (seminars and workshops) for special targets groups and establishment of information resource centers with linkage to other information centers that can help avail the necessary information say on the share prices or even the stocks that are available for sale. The Uganda government should also provide sufficient incentives for investments like tax incentives which will encourage savings and investment hence promoting participation in Capital markets. The Uganda population should fight the dominance of family businesses..

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CHAPTER ONE

1.0 INTRODUCTION

This chapter provides a summery on background information that leads to the research problem, research objectives and significance of the study as well as justification of the study.

1.1 BACKGROUND TO THE STUDY

Capital market operations are mechanisms and opportunities that provide intermediations for investment resources (Capital Market Public Information leaflets No.1&2). Capital market operations can also be defined as the dealings in which trading of financial products such as company shares and bonds are issued by government or private companies (Capital Market Authority Brochure, 2005). Capital Market Authority carries out the regulation and promotion of the development of capital markets in Uganda. It also approves the stock exchange, licenses the brokers/dealers, investment advisors, fund managers and collective investment schemes. It approves all offers of securities.

Raising equity is the process of accumulating resources in a business supplied by the owners of the business (Frank, 2003). Raising equity can be understood as a way of accumulating stocks and shares that do not bear a fixed interest (Black Law’s Dictionary, 1979). In raising equity, the companies may purchase and redeem their own shares to the public. Raising equity has been hindered by low levels of equity because of dividend hungry investors who prefer dividends to re-investment of the profits; the share price has been fluctuating as it is determined by the demand and supply during trade of shares and other financial

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instruments like bonds, treasury bills, certificates of deposit among other instruments.

Capital market operations have faced hindrances like lack of public awareness of the activities that it carries out, investors suffer losses resulting from failure of licensed brokers to meet their contractual obligations, there is low trading in the capital market and this is partly because capital market is still in its infancy.

The steps taken to overcome the problems identified in capital market operations include investor education and awareness about security exchange and investor compensation i.e. investors who suffer losses resulting from failure of licensed brokers to meet their contractual obligations.

Despite these measures, the problems have persisted and if this continues, it will result into failure to achieve the primary objectives of promoting, developing and regulating the Capital markets industry in Uganda hence failure to protect investors and promote market efficiency.

1.2 STATEMENT OF THE PROBLEM

Listed companies are facing problems of raising equity as shown by the low levels of capital to finance the companies’ short and long term projects. This is due to dividend hungry investors, fluctuating share prices, infancy of the capital markets industry in Uganda, investor dissatisfaction among other reasons.

However, even with listing more companies on the securities exchange and companies paying dividends to their share holders, the hindrances have not yet been solved. This may be because Uganda’s financial

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markets are shallow characterized by high interest rates, lack of knowledge and low levels of savings. Inflation rates have also affected investment decisions in Uganda. If these hindrances are not solved, this will result into failure to achieve the primary objectives of promoting, developing and regulating the capital markets industry in Uganda hence failure to protect investors and promote market efficiency.

1.3 PURPOSE OF THE STUDY

The purpose of the study is to establish the relationship between capital market operations and raising equity for listed companies with particular reference to British American Tobacco (U) Ltd, Bank of Baroda (U) Ltd and Uganda Clays Ltd.

1.4 RESEARCH OBJECTIVES

i. To asses the effectiveness of capital market operations.ii. To examine the raising of equity among listed companies.iii. To establish the relationship between capital market operations

and raising equity in listed companies.

1.5 RESEARCH QUESTIONS.

i. What is the effectiveness of capital market operations? ii. How is equity raised in listed companies?iii. To what extent has the level of equity of listed companies

improved after listing on the Uganda Security Exchange?

1.6 SCOPE OF THE STUDY.

1.6.1Geographical Scope3

The study will be carried out in selected listed companies i.e. British American Tobacco Ltd on Jinja road, Bank of Baroda Ltd on Kampala road, Uganda Clays Ltd in Entebbe.

1.6.2 Content ScopeThe study will be confirmed to the role of capital market operations in raising equity for listed companies, factors that have impended the development of capital markets and other benefits of capital markets will be hinted on.

1.7 SIGNIFICANCE OF THE STUDY

i. The study will benefit Ugandan companies by highlighting what capital market operations have got to offer to them and how the companies can counter out their inadequate capital problems.

ii. Uganda Securities Exchange (USE) will learn better about the practical challenges it is facing, especially those that limit the number of quoted companies.

iii. Listed companies will benefit by appreciating the change in leverage position so far, due to its involvement in the capital market operations.

iv. The students of business management, public and other investors will learn about capital market operations in Uganda using this research and can expand on it.

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CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 INTRODUCTION

This chapter entails related literature regarding roles of capital market operations in raising equity. It captures an overview of capital market operations, stock exchange, raising equity and information on;The relevance of previous capital market studies, relationship between privatization and capital market operations, relationship between capital market operations and raising equity, roles of a security exchange, capital market as a source of capital for Ugandan companies, ways of raising equity, how capital markets can be developed and participants in capital markets.

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2.2 CAPITAL MARKETS.

A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt) Miles, (1990).

2.2.1Capital Market Operations.

Cohn (1999), defines capital market operations as the entire spectrum of activities that relate to the buying and selling of financial instruments. According to him, the financial instruments bought and sold on a regular basis include company shares of stock, government treasury bills and bank certificates of deposit.Zake (1999), states that capital market operations can be thought of generally like any other market where one goes to buy, sell or trade for certain goods. In this case the goods consist of securities and other financial instruments.

According to Kibirango (2000), capital market operations are equivalent to goods stall markets since they both openly portray an interplay between forces of demand and supply to determine the prices of numerous products simultaneously.

Kibirango never the less states that; “security markets are a step different as they are not only highly regulated, but investors are protected against fraud and manipulation by the players in both developed and developing markets. For the case of the goods market, the notion is let the buyer be aware”. Cohn and Zake (1999), further assert that capital markets are the totaling of activities involving the

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offering, sale and trading of financial investments. A paper entitled, Capital Markets for Growth, Jobs and Prosperity by Kibirango aimed at making a case for capital market operations in Uganda. It defines the concept of capital markets. This paper also gives the benefits to successful capital markets on the economy and their impact on the industry at large.“Is Uganda ready for a stock exchange?” by Kwesigabo also seeks to make a case for stock exchange in Uganda and discusses the factors conducive for the establishment of a valuable stock exchange. North views capital market operations as the pooling of risk, reduction of uncertainty and accumulation of capital as a way to increase the marginal efficiency of capital and hence increase profits when certain individuals or institutions are suited to the task.

The researcher however points out that increasing the potential for profits does not necessarily lead to immediate creation of institutions even though the benefits are clearly great as stated by North. The greater potentials tend to exit, the further apart servers are from investors.

Kajubi (1996), addresses the issue of capital market operations in Uganda from the banks prospective. He posses the issue as to whether capital market operations are a threat to banks or an opportunity. He adds that traditionally, the banking segment has always been in competition with securities segment of the financial system. Unlike other writers, Kajubi broadens our understanding and the framework of capital market operations with due respect to the banking sector. He divorces himself from aspects such as development prerequisites for successful capital market operations e.t.c and focuses on foreign portfolio vis-à-vis capital marker operations and the role of banks as a means of raising equity in investment.

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However the researcher noticed that there is no threat as stated by Kajubi reason being that both banks and capital markets operations provide an investment avenue for shares (lenders) and a vehicle for raising equity for long term investors (Borrowers).Pohl and his colleagues approach this subject more realistically and thus attempted to answer two questions in discussing the issues concerning capital market operations. They begun by stating the fact that some countries have made remarkable progress in privatizing their enterprises by transferring ownership from the state to private citizens. These countries therefore need to develop the stock markets and institutions such as brokerage, clearing and settlement organizations and regulatory agencies to handle the large volume of share trading that is likely to occur after privatization.Sharma (1993), does not specifically deal with the role of capital market operations in raising equity but tackles a variety of issues putting emphasis on institutional investment which according to him can contribute vitally to strengthening and deepening emerging markets. He also concentrates on collective investment schemes which are important institutional participants in the capital market operations of developed countries and their importance in countries with relatively less developed financial markets is increasing.

2.2.2Participants in the Capital Markets.

A capital market consists of many participants each playing distinct and important roles among which include;Sellers of securities and other financial instruments, governments, banks, financial institutions and companies who obtain money from selling financial instruments to investors.The other participants that import roles in capital markets include underwriters who prepare the offering and find buyers of offered

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securities. Shareholders, who are individuals, partnerships and clients who buy and sell securities. Lawyers who work closely with underwriters and issuers to ensure that an offering meets registration as stock exchange requirements. Accountants who prepare financial statement including the balance sheet, the profit and loss statements for disclosure. Last but not least, the regulatory authorities that control the trading of securities, these include the Registrar General’s office, the CMA and the USE. Other agencies might also be involved such as the Foreign Exchange Control office depending on the offering or investors.

2.3 STOCK EXCHANGE.

A stock exchange or as is commonly called a stock market is the same as a capital market. It is one element in the overall capital market. Stock exchange is a place where securities are formally bought and sold through brokers or dealers, Zake and Cohn (1999).Stock exchange deals only with the “secondary market” that is the buying and selling of shares originally issued by companies in the “primary market”. An active capital market can not theoretically exist without a formal exchange and other means to bring together buyers and sellers of financial instruments.However, stock exchange provides an efficient and regular forum, for trading securities after primary offering and is therefore an important component for capital market development. Kiwanuka (2001), defines security exchange as a market where buyers and sellers meet to trade shares and other securities. The security market of Uganda is called Uganda Securities Exchange (USE).

Pohl in his Word Bank technical paper No.295 states that, “stock exchange will arise spontaneously as the need for them.” He argued that in privatization process, the essential issue here is markets for

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shares of companies in question. As for the case of mature stock markets, government should put in place the necessary legal and regulatory framework to ensure fair, efficient and transparent trading.

Pardy (2003), makes very interesting but realistic observations which are relevant to the study that developing a securities market is a long term multifaceted task that requires extensive institutional development for which there are few short cuts. He further authorizes measures for minimum institutional infrastructure required to support efficient operations of securities markets. However, the researcher believes it is important that countries like Uganda which are trying to establish securities markets understand the whole lengthy process if it is to enjoy the benefits of such markets in as far as investment and resource mobilization is concerned.

2.4 RAISING EQUITY

Equity is the finance that the firm raises from the owners of the business.Higson (1986). He adds that the shareholders are the owners of the business in this case.

2.5 WHY SMALL FIRMS MAY CHOOSE CAPITAL MARKETS TO

FINANCE THEIR BUSINESS.

Higson (1986), advances the following reasons as to why small firms may not choose capital markets for financing their businesses. Small firms are expected to be riskier to investors on the count that they are likely to be less diversified as compared to the larger ones. Secondly they may find it harder to protect themselves from external fluctuations because of lack of market power.

The trend from individuals to institutional investment in the capital markets also introduced a bias in favor of big firms. Wilson (1978),

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observed that investments in companies with a market capitalization of $US.40 million or more. This is because they have no interest in acquiring a controlling interest in the company.Lack of knowledge about the available financing opportunities. Bolton (1971), found that many small firms are prevented by lack of information and experience in presenting application for finance. Small firms are being unfairly treated as they pay higher price for their finance. He says that in order to draw the shares to attention of the market and bring forward sufficient demand for them, it is necessary to offer them to the market at a price below their expected equilibrium price.

2.6 RELEVANCE OF PREVIOUS CAPITAL MARKET OPERATIONS

STUDIES.

Earlier surveys on “impediments to the listing of view on the stock exchange” indicated that the Ugandan public is not yet fully aware of the potential instruments of stock market. The USE educational campaign has helped increase extensive awareness through the development of a comprehensive public awareness program to cater for the various categories of stake holders. Road show campaigns in conjunction with various stakeholders in the industry, Tertiary Institutions Education Program (TIEP) designed for universities, colleges and many other institutions of higher learning.Executive Education Program (EEP), which targets business executives’

company, boards of directors and senior management, USE investment clubs like the business journalists investment club.The exchange has designed a set of USE securities courses to meet the needs of the various categories of professionals. It is structured into modules, which will cover intermediate and advanced teachings.

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Studies also highlighted the other impediments that entangled the CMA namely;Little confidence in the banking sector following the closure of two banks in the past well as a lack of information on companies adds to the problem.The low savings rate which stood at 9% debarred the development of the stock exchange.

The fore mentioned impediments are relevant in such a way that they have helped the CMA design appropriate measures to avert them such as the establishment of an information resource center with linkages to other information centers and promotion of collective investment schemes, (USE Website, 2011). Companies have benefited from capital markets services such as being a source of alternative funding venture capital.

Other stakeholders like investors, employees, regulators and the business community have enormously benefited from earlier surveys about capital markets by stipulating their roles in the economy as a whole hence enabling them harvest the benefits from them.

2.7 CAPITAL MARKETS AS A SOURCE OF CAPITAL FOR UGANDAN

COMPANIES.

Capital markets fill up the investment puzzle because they issue equity and debt instruments that help the corporate sector access cheaper capital from a wider resource bone. The competition in between enables to keep the cost of capital within desirable limits, (Kibirango of CMA, 2000).

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In the case of finance from foreign lenders marginally viable projects could collapse precipitated by the currency dominated obligations.It’s equally uneconomical to use finance from bank short-term loans and overdraft because they are characteristically expensive and are normally used for trade where the profit margin would be assumed high to meet the interest (Kibirango).

2.8 WAYS OF RISING EQUITY.

According to Higson (1986), equity can be raised in two major ways and these are; Through issuing new shares.By retaining profits in the firm.He adds that, in the terms of importance, retained earnings are the major source of finance for most firms. However, the researcher realized that Higson excluded debt equity yet it is a commonly used avenue of raising equity in most small and medium firms in Uganda.

2.9 ROLES OF SECURITY EXCHANGE.

According to Cohn, the following list represents the role security exchange plays;It provides a secondary market, absence of which could make companies have a difficult time selling their shares and debentures. That is because many investors large and small want investments that are liquid that is to say easily convertible into money when needed.

Secondly listing shares on a security exchange makes the shares visible in the eyes of the buying public and ready place for shares to be sold. Accordingly companies which seek to raise large sums of capital can rely on security exchange. Start’s factors are part pf the role of

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security exchange but do not considerably explain why a company needs a joint a security exchange.

A security/ stock exchange provides extremely important services in a capital market. It creates an efficient process for buying and selling of shares of listed companies in the secondary market. This makes it easier for such companies to sell their shares in primary offerings as a buyer know that they can use the stock exchange if they decide eventually to sell some of their holdings.

Security Exchange ensures that companies listed on the (USE) find it easier to raise finance. A few people want to have an investment that is difficult to sell when they need money. It may be anticipated that the public offerings of parastatals under the governments’ privatization program will enhance the attractiveness of the offerings.Trading activity on as exchange sets a price for the stock so those shareholders can know the market value of their holdings.

Last but not least, listed companies are required by the security exchange rules to prepare and distribute periodic reports to shareholders and the exchange. This enhances transparency.Benning (1998), also adds that facilitation of equity financing as opposed to debt financing is a result of securities exchange.

2.10 HOW CAPITAL MARKET OPERATIONS ASSIST IN RAISING EQUITY.

Raising equity is one of roles of capital markets. Equity management is a subset of capital market (Kato, 2000). Equity in the USE is raised through the sale of shares to individual investors or to the public or employees through stock exchange trading. This has increased net worth BATU net worth increased due to Capital market trading activities, (New Vision, 2003).

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Capital markets through the USE has come to salvage companies from the rigors of banking, debt equity by simply encouraging companies to turn into public limited liability companies, inviting the public to subscribe to their shares traded on the USE hence realizing equity as a source of funding and more dividends for shareholders, Kaye, (1999).

There are several other indirect advantages that will accrue to a quoted firm, which include among other benefits, easier access to long term capital, thus realizing equity that could be vital in the improvement in the financial position of the company enhanced status in the business and corporate community and provision of adequate incentives for staff and share holders in form of dividends. The process of raising equity through the stock exchange has a price attached to the changing corporate ownership form individual to collective ownership, Kibirango (2000).

Before BAT (U) Ltd was quoted in the stock exchange, its market capitalization was UGShs 28bn and after being listed in the stock exchange its market capitalization is now 108.9bn Onegi Obel, (2010). This is largely attributed to BAT’s participation in the stock market, which implies that Capital markets play a vital role in rising of company equity in the long run.

2.11 RELATIONSHIP BETWEEN PRIVATIZATION AND CAPITAL MARKET

OPERATIONS.

Mc Lyndon discusses comprehensively the linkages between privatization and capital market operations and development and how they support and reinforce each other to promote economic growth. When implemented as separate policies, privatization and capital market development works to promote economic growth but when governments take advantage of the synergies between the two efforts

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at privatization and capital markets operations are stronger more effective and none sustained in promoting growth. Although the author does not out rightly discuss the role of capital market operations in raising equity, it is very instrumental in this study because it gets to the very basis of the study.

2.12 RELATIONSHIP BETWEEN CAPITAL MARKET OPERATION AND

RAISING EQUITY.

2.12.1 Regulation and Promotion of Capital Markets in Uganda.

According to Claudia Morgenstern, the importance of regulating and promoting the development of capital market operations is a necessity and not a luxury. To him, this is a sort of challenge to the financial sector. When capital market operations are regulated, it creates confidence in the process of raising equity because in the process of raising equity, the investors will be protected from pecuniary loss resulting from failure of the licensed brokers to meet their contractual obligations.

2.12.2 Collective investment schemes and raising equity.

Collective investment schemes are private financial arrangements. They pool resources of many small savers, generating a large pool. The resources are then invested in various assets like shares, bonds, property and treasury bills with the sole purpose of generating equity. Collective investment schemes provide a means for raising equity and enable small investors to participate in capital markets. They also involve the public in the process of investing in securities through pooling resources together which are then invested by professional managers (Sharma, 1993).

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2.12.3 Approval of all offers of securities and raising equity.

The capital Market Authority approves all offers of securities made to the public. Capital Market Authority reviews all the offering documents with the objective of ensuring full disclosure of information regarding the proposed issue and the intending issuers. The capital Market Authority also ensures risks associated with issuing debt instrument in a market with out credit rating services when raising equity.

2.12.4 Approval of stock exchange and raising equity.

Beenhakker, specifically deals with issues concerning values and risks in stock exchange are related in away and go hand in hand. A stock exchange provides an efficient and regular forum for trading securities after primary offering and is therefore an important component for capital market as both exist to bring together buyer and sellers of financial instruments hence raising equity.

Conclusion The ultimate objectives of the development of Capital Markets therefore are to strengthen and improve the raising and allocation of financial resources in order to stimulate and accelerate the process of economic growth. In this context, the role of Capital market operations, which is a major component of financial markets is to provide capital through issuance of stocks and shares as well as long-term debt financing. By providing access to capital and long term financing, they also help to strengthen the financial structure of companies and improve the general solvency of the economy’s financial system.

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CHAPTER THREE

METHODOLOGY

3.0 INTRODUCTION

This chapter presents the research methodology utilized to investigate the Capital markets and raising equity in listed companies in Uganda. It highlights the research design and methods that will be used to obtain the data, outlining some advantaged to justify the choices. The study areas and population, sample selection, the methods to be used to process the data, analyzing and presenting it are also discussed.

3.1 RESEARCH DESIGN.

A cross sectional and explanatory case-study research design was used for the study. Unlike other designs the explanatory one is conducted to new phenomenon or events or an “old” phenomenon examined from a different perspective (Mbaaga, 2000). Capital market operations and raising equity is not a new phenomenon, but in the case of BAT (U) ltd, BOBU and UCL, no one has undertaken a research of any kind. Therefore, it necessitated using an explanatory research design.

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Gummeson (1991), points out that the detailed observations entailed in the study method enables the researcher to study many different aspects, examining them in relation to others and viewing the process within its total environment and utilizing one’s capacity for understanding and analysis.

The case of BAT (U) ltd, Bank of Baroda Uganda Ltd and Uganda Clays Ltd were chosen because they provide a deep and intensive study of a particular social unit confined to a very small number of cases. Thus the field of case study method was limited but it aimed at studying all aspects of social unit Gupta, (1999). Further still, the choice of BAT (U) Ltd, Bank of Baroda and Uganda Clays Ltd as a case study was a strategy for doing research, which involves an empirical investigation of companies at large in relation to capital market operations and their contribution to its equity multiple sources of evidence.

3.2 SURVEY POPULATION.

The study was carried out in BAT (U) Ltd headquarters on Jinja road, Bank of Baroda Uganda Ltd Kampala road, Uganda Clays Ltd at Entebbe Uganda Securities Exchange head offices on Workers House and Capital Market Authority plot 14 parliament Avenue Jubilee Insurance Center. The study was confined to the role of capital markets in raising equity for listed companies and factors that have impended the development of capital markets and other benefits of capital markets were hinted on. The study was limited to specific listed companies’ top and middle management, USE and CMA staff. The researcher looked at records of listed companies, USE and CMA for the period, between 2005 and 2010.

3.3 SAMPLING DESIGN

The researcher used random sampling design in selecting respondents to ensure the relevant data was obtained for the study.

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3.4 SAMPLE SIZE

The sample size comprised of 15 interviewees, 2 from capital market authority, 2 from Uganda Securities Exchange and 11 from listed companies. A total population of 15 interviewees from the above mentioned 5 organizations was short listed and was selected following the procedure mentioned below and then interviewed.

3.5 SAMPLING PROCEDURE

The researcher used simple random sampling. This is a method of selecting units out of the N population such that for every one of the NCn distinct samples had an equal chance of being drawn. In practice a simple random sample is drawn unit by unit. The units from a population were numbered from 1 to N.A series of random numbers between 1 and N was then drawn by means of a computer program that produces such a table. At any draw, the process used gave an equal chance of selection. The probability that all n specified units are selected in n draws is

n . (n - 1). (n - 2) ……… 1 = n! (N-n)! = 1N (N - 1) (N - 2) (N – n + 1) (N)! NCnThis method was very effective for surveys covering a small population. Therefore the researcher preferred to use this method since he dealt with relatively small population, which is easy to shortlist.

3.6 SOURCE OF DATA.

Primary and secondary sources of data were used to obtain information for the research. Gathering primary data entailed going to the field. As stated earlier on, BAT Uganda ltd, Bank of Baroda ltd and Uganda Clays ltd were the area of study. Therefore, with in the

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companies themselves, there are different units, which comprised the primary source of data for the study. In this case, the managing directors, financial directors and managers, senior accountants and accountants, consultants etc, were interview. Besides, the CMA/USE management, for instance, chief executive officers and director were interviewed too, to provide useful data for the research.

Secondary data was acquired through reviewing documents such as textbooks, articles diaries, desk calendars, schedules, abstracts, and speeches that were relevant to the study problem.

3.7 PERSONAL INTERVIEWS

Interviews with managerial staff as well as administrative and technical level staff were used to facilitate collection of information which was impossible with questionnaires. Further more, the method had a high degree of flexibility in that it allowed probing of specific answers. The method had a high response rate from respondents as well as providing opportunities to the researcher to study nonverbal behavior, which helped him asses the reliability of respondents.

The researcher also took keen interest in noting of respondents’

gestures and emotions to draw conclusions whether interview questions are correctly answered and this was based on the researcher’s personal judgment.

3.8 SELF ADMINISTERED QUESTIONNAIRES

Copies of open and closed ended questionnaires were issued to the respondents to fill. The questionnaires captured general answers to questions asked about the contributions of capital market operations to raising equity and performance of listed companies. This method enabled the researcher to reach out to many respondents hence

21

saving time and money as the questionnaires were left behind and collected at a latter date.

3.9 DATA PROCESSING.

Data processing commenced after questionnaires were returned from the field. It comprised of five stages, which include, questionnaire editing, summery of details (this involved bringing together items), preparation of tables, statistical analysis, and correction.3.9.1 Questionnaire Editing.This is the stage where each questionnaire returned is scrutinized for completeness and correctness.

3.9.2Coding In most cases the data collected from a study was observed on N units. The data which the study was concerned with was capable of being dealt with numerically, wither directly or indirectly.

3.9.3 Summary of DetailsAfter the data was scrutinized and properly coded, summaries of details were carried out. This involved bringing together terms e.g. categories of establishments arranged by their locations, activities, size, class etc.

3.9.4Preparation of TablesAt this stage data was organized in tables according to the predetermined skeleton table and categorization to show the most important features of the data collected. When the outlines of the tables were fixed for each category of data required in the report, tables were fixed for each category of data required in the report, tables were produced electronically i.e. by computer. This was tabulation being done.

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3.9.5Data AnalysisThis was one of the crucial and final stages of the study. It aimed at studying and splitting the tabulated data much further and to find some sort of descriptive methods of showing data e.g. calculation of percentages construction of graphs etc. calculation of measures such as correlation was also done to measure the amount of violation of the various answers from the calculated percentage. Data was analyzed both manually and by use of statistical packages for social science (SPSS 11.0 for Windows).

3.9.6 Further AnalysisThe data was further analyzed using both qualitative and quantitative methods of data analysis. Statistical measures were used among others to quantify the relationships (if any) and to provide an indication of confidence place-able on the findings.These techniques helped to explain what the researcher was looking for. A correlation between capital market operations and raising equity in relation to listed companies was made.

3.10 INTERPRETATION

The tables, graphs and all the subsequent of the data discussed in the preceding staged subscribed to the interpretation of the researcher put to the data and other findings from his study.

3.11 LIMITATIONS OF THE STUDY.

The time allocated to carry out the study was too short. This resulted into some inadequacies in the study.

The researcher also faced financial constraints since the study was not sponsored or financed by any other than him.

Negative attitude from respondents, which led to non response and irresponsible answering of the questionnaires.

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Limited research materials such as stationary, computers, magazines, newspapers etc.

CHAPTER FOUR

4.0 PRESENTATION AND DISCUSSION OF RESEARH FINDINGS

4.1 INTRODUCTION

This chapter seeks to address or unlock the research questions and objectives such as assessing capital market operations, establishing raising of equity and the relationship between capital market operations and raising equity as set up in the research proposal, it introduces the results that were analyzed from row data obtained from the field.

The tools used for analysis were frequencies and percentages which the researcher found very effective. Despite the fact that there were problems encountered during the study, the questionnaire were used sufficiently to capture data and among the respondents were top and middle management staffs of BAT (U) Ltd, BOBU, UCL, CMA and USE.

The findings of the report are also absolutely a legacy of primary and secondary data collected from the textbooks, articles, diaries, schedules, abstracts and speeches. The research was restricted to the records of the above mentioned organization.

The researcher in his attempt to come up with the findings, hinted among other contentions issues of a good report, such as the relationship between capital market operations and raising equity of listed companies.

4.2.0 BIOBATA OF RESPONDENTS

4.2.1Number of the company respondents

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The table below shows names of organization and the number of respondents that were taken for the study.Table 4.2.1 Number of respondents per organization. Name of company

Frequency Percentage

BAT (U) Ltd 4 27BOBU 3 20UCL 4 27CMA 2 13USE 2 13Total 15 100Source: Primary data

The above table shows that 15 respondents were interviewed, 4 from BAT (U) ltd, 3 fro BOBU, 4 from UCL, 2 from CMA and 2 from USE.

4.2.2 Job Titles The table below shows respondent’s job titles in the listed companies that were taken as the area of study.

Table 4.2.2 Showing Job titles Job Title Frequency PercentageExecutive Officers

2 13

Directors 5 34Senior Staffs 6 40Consultants 2 13Total 15 100Source: Primary data The above table shows 13% of the respondents were Executive Officers, 34% were Directors, 40% were senior staff and 13% were Consultants.

4.2.3Number of years worked for in the organization and duration in current position of the respondents

25

The table below shows the number of years respondents have worked for and spent in their current positions in the listed companies.

Table 4.2.3: Showing years worked for Period Frequency PercentageLess than 1 year 0 01-2 years 1 73-5 years 4 26Over 5 years 10 67Total 15 100Source: Primary data The table above shows the number of years which the responds have worked for in their organizations and in their current positions.

4.2.4. Age of respondents The table below shows the age brackets of the respondents in the listed companies Table 4.2.4: Showing the age of respondents Age Frequency Percentage20 – 29 0 030 – 39 1 740 49 9 60Above 50 5 33Total 15 100Source: Primary data The above table shows that 0% of the respondents were aged between 20 – 29, 7% were between 30 – 39, 60% were between 40 – 49 and 33% were above 50 years of age.

4.2.5Sex of respondents The table below shows the gender of respondents in the listed companiesTable 4.2.5: Showing sex of respondents Sex Frequency PercentageMale 11 73Female 4 27

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Total 15 100Source: Primary data The above table shows that 73% of the respondents were males and 27% were females.

4.3.0 OBJECTIVE ONE: CAPITAL MARKET OPERATIONS The first objective of this research was to assess capital market operations in Uganda. The findings below are in respect to this objective.

4.3.1Respondent’s views on whether CMA and USE are achieving their objectives are given in the table below. The table below shows respondents views on whether CMA/USE achieve their objectives Table 4.3.1: Showing views of respondents on the above subject Response Frequency PercentageStrongly agree 0 0Agree 5 33Uncertain 0 0Disagree 10 67Strongly disagree

0 0

Total 15 100Source: Primary data

Table 4.3.1 shows that 33% of the respondents agree that the USE / CMA are achieving their objectives of promoting, regulating and developing capital market industry in Uganda, while 67 of them disagree. This therefore shows that CMA / USE is not achieving since the highest percentage of respondents disagreed.

Further explanation on whether USE / CMA are achieving their objectives is illustrated in the figure below.

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Fig 4.3.1: Showing respondents views on whether CMA/USE are achieving their

objectives

020406080

Stro

ngly

agre

e

Agre

e

Unc

erta

in

Dis

agre

e

Stro

ngly

disa

gree

Responses

Perc

enta

ges

Source: Primary data

4.3.2Respondents views on whether CMA’s rules sand regulation protect investors are presented in the table below. The table below shows respondents views on whether CMA’s rules and regulations protect investors in the listed companies.

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Table 4.3.2: Showing responses on whether CMA’s rules and regulations protect InvestorsResponse Frequency Percentage Strongly agree 0 0Agree 6 40Uncertain 0 0Disagree 9 60Strongly disagree

0 0


Table 4.3.2 above shows that 40% of the respondents say that the rules and regulations setup by CMA and USE protect investors while 60% of the respondents disagree with the statement and state factors for disagreeing as high inflationary rate and low interest rates.

The highest percentage of respondents disagreed; this therefore implies that the rules and regulations set by CMA / USE do not protect investors in the listed companies.

More explanation about the rules and regulations set up by CMA / USE is shown in figure 4.3.2

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Fig 4.3.2: Showing respondents views on whether CMA's rules and regulations

protect investors

0

10

20

30

40

50

60

70

Stronglyagree

Agree Uncertain Disagree Stronglydisagree

Responses

Perc

enta

ges


4.3.3Findings on whether listed companies meet the requirement of CMA / USE before being approved to issue shares to the public are shown belowThe table below shows whether listed companies meet the requirement of CMA / USE before being approved to issue shares to the public.

Table 4.3.3: Showing responses on where companies meet the requirements of CMA/USEResponse Frequency Percentage Strongly agree 14 93Agree 1 7Uncertain 0 0Disagree 0 0Strongly disagree

0 0


The table above shows that 93% strongly agree that listed companies have to first meet all the requirements to be approved to issue shares

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to the public while 7% of the respondents just agree about the statement. Among the requirements required so as to be approved to issue shares to the public include full disclosure because it observes good business management practices ensure better corporate governance, benefiting not only the firm be the economy as a whole.

This therefore implies that companies meet the requirements of CMA/USE to be approved to issue shares to the public.

Fig 4.3.3: Showing responses on whether listed companies meet the requirements of CMA/USE

0

20

40

60

80

100

Stronglyagree


Responses

Perc

enta

ges


4.4.0 Findings on whether the licensing policy of CMA/USE has mobilized savings from domestic, regional and international markets and whether listed companies have investors from these markets are shown in the table below. The table 4.4.1 shows respondent’s views on whether the licensing policy of CMA/USE has mobilized savings from domestic, regional and international markets and whether listed companies have investors from these markets.

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Table 4.4.1: Showing whether the licensing policy of CMA/USE has mobilized savings from domestic, regional and international markets. Response Frequency Percentage Strongly agree 15 100Agree 0 0Uncertain 0 0Disagree 0 0Strongly disagree

0 0

Total 15 100Source: Primary data In the above table 100% strongly agree with the statement while 0% disagree with the statement. This therefore implies that CMA/USE has managed to mobilize savings from domestic, regional and international markets. Further explanation on whether listed companies have investors from domestic regional and international is shown in the figure below.

Fig: 4.4.1 Showing respondents views on whether CMA / USE are achieving their objectives

020406080

100120

Stronglyagree


Responses

Perc

enta

ges


4.4.2Findings on whether CIS are significant in widening the ways of investment in Uganda are shown below.

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The table below shows whether CIS are significant in widening the ways of investment in Uganda. Table 4.4.2: Showing responses on whether CIS are significant in widening the ways of investmentResponse Frequency Percentage Strongly agree 0 0Agree 1 7Uncertain 0 0Disagree 12 80Strongly disagree

2 13


The table above shows that 7% agree that CIS are significant is widening the ways of investment in Uganda, while 80% disagree and 13% strongly disagree. Those who disagree sited unemployed rate, inflationary rate and poor savings amongst Ugandans, since CIS is a private financial arrangement where resources of many small savers generate a large pool of financial resources where the resources are then invested on a block in various assets with a sole purpose of generating high returns while minimizing risk through diversification of investments.

This therefore implies that CIS are not significant in widening the ways of investment.

Further presentations of whether CIS widens the ways of investment are shown in the figure below.

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Fig 4.4.2: Showing whether CIS are significant in widening ways of investment

0

1020

3040

5060

70

8090

Stronglyagree


Responses

Perc

enta

ges


4.4.3Findings on whether small investors have shares in listed companies as a block through CIS is shown below. The table below shows respondents views on whether small investors have shares in the listed companies.

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Table 4.4.3: Showing responses on whether small investors have shares in the listed companies. Response Frequency Percentage Strongly agree 0 0Agree 2 13Uncertain 0 0Disagree 0 0Strongly disagree

13 87


Table 4.4.3 shows that 13% of the respondents said that there are small investors in their companies who invested as a block through CIS where as 87% of the respondents strongly disagreed. This therefore implies that small investors have the least number of shares in the listed companies.

Further presentation on whether there are small investors who invested as a block through CIS is shown in the figure below.

Fig 4.4.4: Shwoing respondent's views on whether small investors have shares in

listed companies

0

20

40

60

80

100

Stronglyagree


Responses

Perc

enta

ges


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4.4.3

Fig. 4.4.3: Showing respondents’ views on whether small investors have shares

in listed companies

4.5 OBJECTIVE TWO: RAISING EQUITY

The second objective of this research was to establish raising equity in listed companies and the following were the findings with due respect to the mentioned objectives.

4.5.1Findings on whether the listed company’s net worth increased after being quoted on the securities exchange are presented in the table below. The table below shows respondent’s views on whether listed companies’ net worth increased after being quoted on the securities exchange.

Table 4.5.1: Showing responses on whether listed company’s net worth increased. Response Frequency Percentage Strongly agree 0 0Agree 15 100%Uncertain 0 0Disagree 0 0Strongly disagree

0 0


All the respondents interviewed agree that the net worth of their companies increased after being quoted on the securities exchange. This therefore shows that listed companies’ net worth increased after being quoted on the securities exchange. Further presentations are given in the figure below.

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Fig 4.5.2: Showing responses on whether listed companies net worth increased

0

20

40

60

80

100

120

Stronglyagree


Responses

Perc

enta

ges


4.5.2Findings on whether the companies met their equity requirement when quoted on the securities exchange is shown in the table belowThe table below shows respondent’s views on whether companies met their equity requirements when quoted on the securities exchange. Table 4.5.2: Showing responses on whether companies met their equity requirementsResponse Frequency Percentage Strongly agree 0 0Agree 15 0Uncertain 0 0Disagree 15 100Strongly disagree

0 0

Total 15 100Source: Primary data The table above therefore shows that 100% of the listed companies did not meet equity requirement after being quoted on the securities exchange since all respondents unanimously disagreed. Further information is shown by the figure below.

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Fig 4.5.1: Showing responses on whether listed companies net worth

Fig. 4.5.2: Showing respondents’ view on whether companies met their equity

requirements

Fig 4.5.3: Showing responses on whether Companies met their equity requirement

0

20

40

60

80

100

120

Stronglyagree


Responses

Perc

enta

ges

Source: Primary data 4.5.3Findings on whether the public is responding to the listed companies share stocks is shown on the table below The table below shows respondent’s views on whether the public is responding to the listed companies’ share stocks. Table 4.5.3: Showing responses on whether the public is responding to the listed companies’ shares stocks. Response Frequency Percentage Strongly agree 15 100Agree 0 0Uncertain 0 0Disagree 0 0Strongly disagree

0 0


Table 4.5.3 shows that the public is responding to the offers on the stock exchange. Further information on whether the public is responding to the share stocks is shown in the figure below.

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Fig 4.5.4: Showing responses on whether the public is responding to the listed

companies share stocks

020406080

100120

Strong

ly agre

e

Agree

Uncerta

in

Disagr

ee

Strong

ly disa

gree

Responses

Perc

enta

ges


However, the researcher sis not dwell so much on certain questions that were highlighted in the questionnaires such as the company’s market capitalization in the stock market, the company’s debt to equity ratio, the average number of deals struck by the company in the stock exchange and the company’s opening and closing price per share in the stock market. These according to the finance directors and senior accountants of the listed companies say that it keeps on fluctuating from day to day so if was not prudent to dwell in-depth on them.

4.6 THE RELATIONSHIP BETWEEN CAPITAL MARKET OPERATIONS

AND RAISING EQUITY

The research found out that the amount of equity raised by listed companies solemnly depend on the efficiency and effectiveness of capital market operations regulation, promotion and development, CIS, approval of stock exchange and approval of offers of securities have a direct influence on raising equity of listed companies. This is according to senior management of both listed companies and CMA/USE.

39

Fig.

The study also discovered that the slight increase in equity for listed companies as a result of the following factors, the list is by no means exhaustive.

The Uganda capital market is still in its infancy stage, less developed coupled with poor public awareness poor savings policy, prevalence of “me-my self and – I” business.

The Pearson correlation coefficient (r) was used to establish the relationship between Capital market and raising equity as seen in the table below.

Table 4.6.1: Showing relationship between Capital market operations and raising equity Correlations Capital

market Raising equity

Capital market Person Correlation

1.000 .912**

Sig. (2-taied) . .000N 15 15

Raising equity Pearson Correlation

.912** 1.000

Sig. (2-tailed) .000 .N 15 15

** Correlation is significant at the 0.01 level (2-tailed)

Results revealed a significant positive relationship between Capital market operations and raising equity. (r =. 912**, sig. = .000). This implies that the more efforts that Uganda Capital Markets Authority, Uganda Securities Exchange and listed companies (BAT, Bank of Baroda, Uganda Clays) put in the capital market operations, the higher the equity level in listed companies.

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CHAPTER FIVE

5.0 SUMMARY, CONCLUSION AND RECONMMENDATION

5.1 Introduction

This chapter attempts to draw a summary, recommendation and conclusion of the findings of the study that are inferred from research objectives and questions. Plus some sources from secondary data were used. This will help other users of this report to expand upon the study. The recommendations tend to site possible solutions to the problems embedded in the research findings let alone the statement of the problem.

5.2 SUMMARY OF FINDINGS

The researcher found out that even since the inception of CMA in 1996 and the approval of USE as a stock exchange in 1997, the functions of these organizations and benefits have not been apparent. The listed companies’ market capitalization has not significantly improved to meet their equity requirement.

5.2.1 Summary on Capital Market Operations The government should embark on nation wide public awareness campaign. In this vein the CMA which is charged with the responsibility of promoting, regulating and developing the capital market industry and the USE need a lot of funding support to do the same. Not only can the capital market operations become the engine for “poverty eradication” it could also be “wealth creation” engine, especially if the building of savings and investment culture leads to raising of equity for listed companies.

The researcher revealed that full capital market operations will strongly benefit listed companies over time.

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5.2.2Summary on Raising Equity The researcher found out that the Uganda public is risk averse and that the savings and investment culture is very poor. The Ugandan economy is also faced with high inflationary rate, low interest on investment resulting from low trading high interest rate charged by banking institutions and high unemployment rate affects raising equity of listed companies.

5.3 CONCLUSIONS

The role of capital market operations in influencing the level of a listed company’s equity has been found onto to be pivotal and paramount.

5.3.1Conclusion on Capital Market Operations For the case of Uganda, it has not been the case due to the problems and challenges faced by listed companies, the CMA and USE as mentioned earlier. The development of capital markets operations must be at the forefront of our country’s social and economic development plan with active participation of all stakeholders.

5.4 RECOMMENDATIONS

Recommendations were suggested basing on study findings in order to improve the efficiency and effectiveness of capital market operations in raising equity for listed companies. Recommendations were registered from respondents within listed companies and USE /CMA staff.

Other recommendations were advanced by the researcher basing on the study findings and other relevant information.

5.4.1Recommendations on Capital Market Operations 43

CMA must be widened so as to spread sensitization campaigns to embark on the public awareness campaigns and education initiatives (seminars and workshops) for special targets groups.

The establishment of information resource centers with linkage to other information centers can help avail the necessary information say on the share prices or even the stocks that are available for sale.

5.4.2Recommendations on Raising Equity The Uganda government should provide sufficient incentives for investment, like tax incentives encourage savings and investment hence promoting participation in capital markets. The Uganda population should fight the dominance of family businesses.

More effort is needed in CIS because they channel funds from low-income earners and enable them to share in large investment with high earnings.

There is need to address issues of mobilization of saving reform of the pensions and insurance sector. These sectors have a key role to play in the development of capital markets as they affect people’s incomes positively or negatively.

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REFERENCES

1. Benning, (1999). Capital Markets Authority Journal Vol. 3, Boston publishers: Boston.

2. Morgenstern, C. (1996). Capital Market Development Financing Russia’s Transformation.

3. Higson, C.J. (1986). Business Finance. Yorkshire Publishers: New York.

4. Kajubi, W.Y. (1996). Capital Markets: Are they a threat to Banks or are they an opportunity for Banks (Paper presented at a seminar organized by the institute of Bankers Uganda)

5. Kato, J. (2002). CMA Journal Vol. 3, No. 2 Kitara publishers: Kampala.6. Kaye, S. (1999). Capital Market Journal. New vision publishers:

Kampala. 7. Kibirango, L. (2000). CMA Journal Vol. 4, No. 3 pages 6 – 10 Kitara

publishers: Kampala. 8. Kiwanuka, H. (2000). Journal for the Capital Markets Industry, USE

Kitara publishers: Kampala. 9. Tumubweine, M. (1999). CMA Journal Vol. 3, No. 3 Kitara publishers:

Kampala. 10. Marvin, R. J. (1998). Company Management and Market

Development in Uganda (1st Ed). 45

11. Maurice, E. M. (1994). Current Capital Market (1st Ed). 12. McLindon, M.P. (1995).Privatization and Capital Market

Development. 13. Livingstone, M. (1990) Money and Capital Markets (3rd Ed) Aldine

publishers: London. 14. North, D. (1998).Organization and Reorganization in the Finance

Markets 15. Onegi, O. (2003). CMA Journal Vol. 5 No. 6 Kitara publishers

Kampala. 16. Pardy, R. (1992). Institutional Reform in emerging Securities

Markets. Policy Research Working Paper Vol.907. 17. Pohl, G. (1999).Creating Capital Markets in Central and Eastern

Europe. World Bank Technical Paper No. 295. 18. Sharma, K. (1993). The role of institutional investors in building

effective financial markets. Capital markets Department International Finance Corporation.

19. Sharma, K. (1990). Collective Investment Schemes. A background paper. Capital Department, International Finance Corporation.

20. Zake, F., & Stuart, R. (1999). Capital Markets Development in Uganda (1st Ed) New Vision Publishers Kampala.

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APPENDIX I

QUESTIONNAIRE ON CAPITAL MARKET OPERATIONS AND RAISING

EQUITY IN LISTED COMPANIES.

Dear respondent, This questionnaire is designed to collect data on the extent / degree to which capital market operations contribute to raising equity of listed companies. Kindly spare some of your valuable time and respond to the following questions / statements as genuinely as possible presenting facts about your organization. The information given will be treated with utmost confidentiality. Please respond to the following questions / statements as appropriate as possible by choosing the appropriate response.

SECTION A: GENERAL INFORMATION 1. Gender

□ Male □ Female

2. Age category

47

□20-30 years □30-40 years □above 40 years

3. What is your level of education?

□ University □ Tertiary □secondary

□primary others (specify) …………………………..4. For how long have you worked for your organization?

□Less than a year □1-5 years □5-10 years

□above 10years

SECTION B: REGULATION AND PROMOTION OF CAPITAL MARKET OPERATIONS. The Capital Market Authority and Uganda’s securities exchange are achieving their objective(s). Strongly agree

Agree Uncertain Disagree Strongly disagree

The rules and regulations setup by Capital Market Authority protect investors. Strongly agree


48

If you disagree give reason(s)….…………………………………………………………………………………………..………………………………………………………………………………………………………………………………………………………………………………………………

Listed companies meet the requirements of capital market authority before being approved to issue shares to the public. Strongly agree


SECTION C: LICENSING DEALERS AND COLLECTIEVE INVESTMENT SCHEMES

The licensing policy of capital market authority has the capacity of mobilizing savings from domestic regional and international markets. Strongly agree


You have regional and International investors in your company.Strongly agree


Collective investment schemes are significant in widening the ways of investment in Uganda. Strongly Agree Uncertain Disagree Strongly

49

agree disagree

If you disagree, why?………………………………………………………………………………………………………………………………………………………………………………………………

Small investors have invested in your company as a block through collective investment schemes.Strongly agree


SECTION D: RAISING EQUITY

Listed company’s net worth increased when it was quoted on the securities exchange Strongly agree


By what margin has it increased? Less than 20% Between 20 and

40%Between 40 and 60%

Above 60%

What is your company’s market capitalization in stock market? ………………………………………………………………………………………………………………………………………………………………………………………………

Your company met its equity requirement when it was quoted on the securities exchange.

50

Strongly agree


By what percentage is the public responding to your company’s offer in the stock exchange.Less than 20% Between 20 and

40%Between 40 and 60%

Above 60%

What is your company’s debt to equity ratio? ………………………………………………………………………………………………………………………………………………………………………………………………

What is the average number of deals struck by your company in the stock exchange? ………………………………………………………………………………………………………………………………………………………………………………………………

What is your company’s opening and closing price per share in the stock market? ………………………………………………………………………………………………………………………………………………………………………………………………

SECTION E: PROPOSALS TO IMPROVE ON CAPITAL MARKET OPERATIONS IN UGANDA.

Capital market authority educates and makes investors aware of securities exchange and capital market operations. Strongly agree


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Investors are compensated losses suffered resulting from failure of a licensed broker to meet his contractual obligations. Strongly agree


Payment of dividends to shareholders makes the share price competitive on the share market. Strongly agree


Any other suggestions to improve the capital market industry in Uganda. ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Your participation in this exercise is highly appreciated.God bless you.

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Documents

CAPTER ONEcees.mak.ac.ug/sites/default/files/publications/Isaac's.doc · Web viewHowever, the researcher sis not dwell so much on certain questions that were highlighted in the