Initial Returns of Shariah versus Non-Shariah IPOs: Are There Any Differences?

Abdul-Rahim, Ruzita; Che-Embi, Nor Azizan

doi:10.17576/pengurusan-2013-39-04

Cited by 23 publications

(24 citation statements)

References 31 publications

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“…The study contributes to the existing theory on the signalling hypothesis concerning the IPO values in the aspects of the application of Trueman's (1986) signalling model in emerging market, specifically in Malaysia. The findings of this study justify the significant and signalling effect of growth opportunities that propel the aftermarket prices and firms market values, and eventually increase initial returns, which gives support on the positive relationship between growth opportunity and IPO underpricing that provided by Abdul-Rahim and Che-Embi (2013).…”

Section: Discussionsupporting

confidence: 62%

Growth Opportunity and IPO Value: An Empirical Study of Malaysian IPOs

Ong¹,

Mohd‐Rashid²,

Mohd³

2020

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The offer price of Malaysian initial public offerings (IPOs) is mostly determined by fixed-price mechanism, indicating that information for investors regarding the actual value of an IPO is not being fully reflected in the offer price. The investors' opinion in fact triggers IPO value on the first trading day in the market. This study aims to investigate the effect of growth opportunity on the pricing of Malaysian IPOs upon being listed on Bursa Malaysia. The sample of the study consists of 126 IPOs listed from January 2009 to December 2017. Through the analysis of cross-sectional and quantile regression in median and high quantiles, the study found a significant positive relationship between growth opportunity and total market value of IPOs. The findings suggest that IPOs which allocate a greater proportion of proceeds for firms' future growth signal the firms' quality, leading investors to trigger IPO value upwards during first-trading day. The findings have implications for the regulators, specifically the Securities Commission and Bursa Malaysia, to ensure that the information on the uses of proceeds revealed in IPO prospectuses is in line with the "Equity Guidelines" because this information gives impact on the investors' decisions towards IPO subscription.

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Section: Discussionsupporting

confidence: 62%

Growth Opportunity and IPO Value: An Empirical Study of Malaysian IPOs

Ong¹,

Mohd‐Rashid²,

Mohd³

2020

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“…Based on the report by Mohd- Rashid et al (2018) from 2000 to 2014, the average value of IPO offer price was lower than the RM0.96. Abdul-Rahim and Che-Embi (2013) reported that this value was lower than RM1.11…”

Section: Analysis Of Resultsmentioning

confidence: 86%

Leverage and Ipo Pricing: Evidence From Malaysia

Ong¹,

Mohd‐Rashid²,

Mohd

2020

International Journal of Banking and Finance

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The pricing of IPOs is a challenging task among underwriters as they require resources from firms. Contrary to the non-financial information presented in a prospectus to set an offer rice, pre-IPO accounting information could arguably influence IPO offer price. This study aims to investigate the relationship between leverage and IPO offer price. A crosssectional Ordinary Least Square (OLS) regression was implemented to investigate the relationship between leverage and offer price based on a sample of 129 Malaysian IPOs issued between January 2009 and December 2018. As a result, it was proven that leverage was negatively related to offer prices. Accordingly, it was proposed in the findings that fit, which issued higher leverages prior to IPO listing, often posed high financial risks. Subsequently, underwriters and issuers set a lower price for IPOs to compensate for a higher degree of information asymmetry among retail investors. Among the implications of this study’s findings include investor concerns on accounting information, especially leverage upon determining IPO value and IPO investment.

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“…These results therefore indicate that companies' IPO motivation in the Malaysian IPO market was to finance the future investment and future growth of assets. The current study is different from prior IPO studies in the Malaysian IPO market (Abdul-Rahim & Che-Embi, 2013;Jelic, Saadouni, & Briston, 2001), because it investigates the specific items that issuers disclose as the intended use of the IPO's proceeds and the amount allocated to each use. Therefore, this study uses the information in the prospectus to find out the intended use of the IPO's proceeds, rather than making use of accounting information in the annual report, which is regarded as expost IPO information.…”

Section: Introductionmentioning

confidence: 99%

Decomposition of intended use of IPO proceeds: Evidence from Malaysia

Badru

2021

GADJAH MADA INT. J. BUS.

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The main objective of the study is to identify what Malaysian IPO issuers indicate as intended use of IPO proceeds and the use that has the highest amount of allocation. In order to achieve the objective of the study, a manual content analysis of 221 IPO prospectuses issued during the period of 2005-2015 were considered. Based on the manual content analysis, the data were analysed using descriptive statistics and analysis of variance (ANOVA). The results indicate that the three major intended uses of IPO proceeds in Malaysian IPO market are growth opportunities (53.90%), debt repayment (29.12%) and working capital (12.87%). However, growth opportunities and debt repayment have greater amount of allocation than working capital over the sample periods. Additionally results show that Malaysian IPO issuers expend more on capital expenditure and expansion rather than research and development in terms of growth opportunities. Further analysis in terms of the frequencies of number of IPO issuers indicate that number of issuers that have a designated amount for working capital (95%) supersede issuers in the growth opportunities group (90%). These results suggest that issuers can consider intended use of IPO proceeds information as a signal mechanism and potential investors can as well consider the information useful before making their investment decisions.

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Initial Returns of Shariah versus Non-Shariah IPOs: Are There Any Differences?

Cited by 23 publications

References 31 publications

Growth Opportunity and IPO Value: An Empirical Study of Malaysian IPOs

Growth Opportunity and IPO Value: An Empirical Study of Malaysian IPOs

Leverage and Ipo Pricing: Evidence From Malaysia

Decomposition of intended use of IPO proceeds: Evidence from Malaysia

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