Long Term Performance of Islamic Share Price for Initial Public Offerings (IPOs) in Malaysia: Evidence from Sharia-Compliant Companies Listed on the Malaysian Stock Exchange (2006-2010)

Abstract

The objective of this study is to investigate the long-term (one to three year) performance of initial public offerings (IPOs) for sharia-compliant companies listed on the Malaysian Stock Exchange (MSE) for the period from 2006 till 2010. This study examines why some IPOs companies have a positive, and some IPOs companies have a negative long-term cumulative abnormal return (CAR). KLCI index is used as a benchmark for measuring long-term performance of IPOs for sharia-compliant companies. The empirical results show that the long-term performances for sharia-compliant companies are performed better (16.81 percent) than their benchmark for CAR equal-weight and the result for CAR value-weight show a slightly outperformed their benchmark (-0.07 percent). The results also indicate that CAR for equal-weight and value-weight of IPOs for sharia-compliant companies are significantly higher over performing by 14.58 percent and 4.11 percent respectively in the year 2006. While the results in 2007 (-1.34 percent) and 2008 (-3.43 percent) for value–weight are underperformed. This study also found that the underpricing, offer price, offer size, market type, trading/service industry, consumer product industry, property industry and REIT industry were statistically significant.

Product Quality and Corporate Financial Performance of Bursa Malaysia

“…While "the number of studies on product is increasing, experimental tests on the practice of product by BM firms in developing markets particularly Malaysia are still scarce". Other studies argued that there is a small number of studies documented in relations of the firm performance of Malaysian BM (Abu Bakar & Rosbi, 2016). Product is declining judging from its poor detection level.…”