Initial performance of new issues of shares in Malaysia

Yong, Othman; Isa, Zaidi

doi:10.1080/0003684022000020869

Cited by 59 publications

(50 citation statements)

References 31 publications

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“…Finally, there are other possible explanations for underpricing, such as different board listings in the Main Board than the Second Board where new issues listed are smaller in size, as Yong and Isa (2003) suggest, or because new issues are listed in different countries. For example, in the case of Singapore where allocations of the new stock are made through a public lottery, there are investors who demand more shares of new issues and are willing to buy in the after-market from parties already allocated the issues.…”

Section: Some Theoretical Explanations For Ipo Underpricingmentioning

confidence: 99%

Government Public Policy, Regulatory Intervention, and Their Impact on IPO Underpricing: The Case of Malaysian IPOs

Prasad

Vozikis

Ariff

2006

J Small Business Management

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This study examines the impact of government initial public offering (IPO) regulation intending on promoting public policy. The study examines the results of the implementation of a Malaysian government policy in 1976, which mandated that at least 30 percent of any new shares on an IPO offer be sold to the indigenous Bumiputera population or to mutual funds owned by them. The study examined the short-run and long-run underpricing of Malaysian IPOs and found that Malaysian IPOs are highly underpriced compared to IPOs in developing countries, creating a market microstructure effect. It also confirmed that the Malaysian government's regulatory intervention in spite of noble public policy intentions appeared to be the significant factor for the emergence of an average firstday underpricing increase of Malaysian IPOs by 61 percent during the period after the regulatory economic policy was instituted. Furthermore, the study found that this high underpricing persists even for the long run, in contrast to the long-run performance of IPOs in the United States.Dr. Prasad is associate professor of finance at the University of Massachusetts-Lowell, where he teaches investments, portfolio analysis and security management, corporate finance, business finance, and short-term financial management. He has published several articles relating to the financing of start-up ventures such as IPO underpricing, signaling to business angels and venture capitalists, harvesting through IPOs, strategy and IPO market selection, capital structure issues, and valuation. In addition, he has several years' industrial experience in business plans and start-up financing, capital budgeting, project management, production and operations management, financial planning and insurance.

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Section: Some Theoretical Explanations For Ipo Underpricingmentioning

confidence: 99%

Government Public Policy, Regulatory Intervention, and Their Impact on IPO Underpricing: The Case of Malaysian IPOs

Prasad

Vozikis

Ariff

2006

J Small Business Management

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“…In Malaysia, studies such as underwriters' reputation (Jelic et al 2001), proportion of IPO shares allocated to Bumiputra investors (How et al 2007), privatisation IPOs versus other IPOs (Paudyal, et al 1998), firm size (Yong 1996), and over-subscription ratio (Yong & Isa 2003), have been carried out to determine the possible relationship between these variables and the initial returns of Malaysian IPOs. How et al (2007) examine the change in regulation in 1996 towards a market-based pricing mechanism, and its effect on the under-pricing of Malaysian IPOs.…”

Section: Introductionmentioning

confidence: 99%

Winner’s Curse and Bandwagon Effect in Malaysian IPOs: Evidence from 2001-2009

Yong

2011

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This paper examines the winner's curse hypothesis and the bandwagon effect in initial public offerings (IPOs), using Malaysian IPO data from January 2001 to December 2009. The average initial return (offer-to-close) for the 160 Malaysian private placement IPOs is 18.51 percent as opposed to the average initial return (offer-to-close) of 28.84 percent for the 210 non-private placement IPOs, which gives support to the winner's curse hypothesis, where uninformed investors (using non-private placement IPOs as the proxy) demand a higher initial return in the absence of informed investors (using private placement IPOs as the proxy). The study also finds that the presence of a large number of informed investors in an IPO exercise, as compared to uninformed investors, brings with it an increased interest, or the bandwagon effect, in that particular stock, which results in higher initial return. ABSTRAK Kajian ini meneliti hipotesis sumpahan pemenang dan kesan ikut serta pada tawaran awam permulaan (TAP), dengan menggunakan data TAP Malaysia dari Januari 2001 hingga Disember 2009. Purata pulangan awal (tawaran-hinggapenutup) bagi 160 TAP Malaysia jenis perletakan persendirian adalah 18.51 peratus, berbanding purata pulangan awal (tawaran-hingga-penutup) sebanyak 28.84 peratus bagi 210 TAP Malaysia jenis bukan perletakan persendirian, yang menyokong hipotesis sumpahan pemenang, iaitu pelabur kurang berpengetahuan (dengan TAP Malaysia jenis bukan perletakan persendirian sebagai proksinya) mahukan pulangan awal yang lebih tinggi bilamana tiadanya pelabur berpengetahuan (dengan TAP Malaysia jenis perletakan persendirian sebagai proksinya) dalam sesuatu TAP. Kajian ini juga mendapati bahawa kehadiran jumlah pelabur berpengetahuan yang besar dalam satu-satu TAP, berbanding dengan jumlah kehadiran pelabur kurang berpengetahuan, menyebabkan peningkatan minat pada saham yang berkenaan, atau berlakunya kesan ikut serta, yang menghasilkan pulangan awal yang lebih tinggi.

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“…Existing studies i.e. Rock (1986), Yong and Isa (2003), Cheng et al (2005), Ljungqvist et al (2006) indicate that subscription rate plays an important role in affecting after market performance of IPOs. Agarwal et al (2006) evidenced that investor's demand for IPOs are positively related to underpricing.…”

Section: Description and Estimation Of Variablesmentioning

confidence: 99%

Do analyst's pre-issue recommendation create value? Empirical evidence from Indian IPO market

Sahoo

2014

The Spanish Review of Financial Economics

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Initial performance of new issues of shares in Malaysia

Cited by 59 publications

References 31 publications

Government Public Policy, Regulatory Intervention, and Their Impact on IPO Underpricing: The Case of Malaysian IPOs

Government Public Policy, Regulatory Intervention, and Their Impact on IPO Underpricing: The Case of Malaysian IPOs

Winner’s Curse and Bandwagon Effect in Malaysian IPOs: Evidence from 2001-2009

Do analyst's pre-issue recommendation create value? Empirical evidence from Indian IPO market

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