Signalling Effect of Auditor Reputation and Lock-Up Period on Over-Subscription Ratio: Evidence from Malaysian Fixed-Price IPOs

Albada, Ali; Yong, Othman; Low, Soo-Wah

doi:10.33736/ijbs.3250.2020

Cited by 2 publications

(3 citation statements)

References 51 publications

(97 reference statements)

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“…This study compares consistency in empirical results with the studies of both developed and emerging markets. The third rationale is that existing studies focus upon trading volume changes, short-run performance around lockup expiry, long-run post-IPO performance, IPO prestige signals, and oversubscription [30][31][32][33][34][35][36][37][38]. Studies on long-term corporate perspectives in a public corporation's perpetual Second, IPO characteristics of firms listed on Bursa Malaysia are somewhat a mix of emerging and developed countries' IPO characteristics in terms of market segregation, lock up expiry, share moratoriums (from mandatory and fixed to staggered), listing requirements, and delisting regulations.…”

Section: Introductionmentioning

confidence: 99%

“…This study compares consistency in empirical results with the studies of both developed and emerging markets. The third rationale is that existing studies focus upon trading volume changes, short-run performance around lock-up expiry, long-run post-IPO performance, IPO prestige signals, and oversubscription [30][31][32][33][34][35][36][37][38]. Studies on long-term corporate perspectives in a public corporation's perpetual and sustainable survivorship are limited to only descriptive statistics in Malaysia.…”

Section: Introductionmentioning

confidence: 99%

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Predictive Role of Ex Ante Strategic Firm Characteristics for Sustainable Initial Public Offering (IPO) Survival

2021

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This study attempts to predict how long a newly listed corporation, usually termed initial public offering (IPO), will survive on the equity listing market. The three-fold contribution of this study comprises a hand-collected and substantially expanded dataset for listed IPOs (1990–2017) over a maximum tracking period of 31 years (1990–2020) to predict the IPO survival on emerging Malaysian capital market, the rationale and consequences for unifying the two listing boards (Main Board and Second Board) in 2009, and an investigation of the predictive role of ex ante strategic prospectus information as early warning signals for sustainable survival of Malaysian IPOs. We also make comparisons for the survival profile of IPOs listed on different listing equity boards. We use Cox proportional hazard (PH) model to estimate the empirical results because of the cohort research design of the study. Overall empirical results show that survival curves for IPOs listed on Main Board and Second Board were not statistically different. However, Second Board IPOs remained more vulnerable to hazard. The survival curves for IPOs listed on Main Market and ACE Market are statistically different. Empirical results reveal that high share premium, high listed capital, and longer firm age at listing date significantly increase the survival (reduce hazard) of IPOs listed on the Main Market and the Second Board. However, bigger firm size and elevated risk factors significantly reduce the survival (increase hazard) of the listed IPOs mentioned above. However, share premium is the only variable that has a negative and significant correlation with IPO survival on ACE Market. These results have implications for the regulators, prospective investors, and policymakers of emerging markets, where the IPO prospectus disclosures bridge the information asymmetry gap prevailing due to the nonexistence of public information prior to the IPO. Empirical findings of this study can be generalized to other developing and emerging markets where IPO prospectus substantially mitigates information asymmetry and ex ante strategic firm characteristics act as early warning signals in predicting IPO survival.

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Section: Introductionmentioning

confidence: 99%

“…This study compares consistency in empirical results with the studies of both developed and emerging markets. The third rationale is that existing studies focus upon trading volume changes, short-run performance around lock-up expiry, long-run post-IPO performance, IPO prestige signals, and oversubscription [30][31][32][33][34][35][36][37][38]. Studies on long-term corporate perspectives in a public corporation's perpetual and sustainable survivorship are limited to only descriptive statistics in Malaysia.…”

Section: Introductionmentioning

confidence: 99%

Predictive Role of Ex Ante Strategic Firm Characteristics for Sustainable Initial Public Offering (IPO) Survival

2021

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“…Tajuddin et al (2018) found that Shariah IPOs experienced lower oversubscription rates than non-Shariah IPOs. Furthermore, the findings of Albada et al (2019Albada et al ( , 2020 showed that IPOs certified by reputable underwriters and auditors experienced low oversubscription rates among the fixed-price IPOs in Malaysia. Overall, the current study puts forward the notion that other pre-IPO information from IPO prospectuses affects the oversubscription rates, and this topic was not discussed in prior studies.…”

Section: Introductionmentioning

confidence: 99%

Earnings forecast disclosures and oversubscription rates of fixed-price initial public offerings (IPOs): the case of Malaysia

Ong¹,

Mohd‐Rashid²,

Anwar³

et al. 2023

JABES

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PurposeThe main purpose of this study is to examine the disclosure of earnings forecasts in firms' prospectuses to explain investor demands or, in other words, oversubscription rates of Malaysian initial public offerings (IPOs).Design/methodology/approachOrdinary least squares and robust methods were used to examine cross-sectional data comprising 466 fixed-price IPOs reported for the period from January 2000 to February 2020 on Bursa Malaysia.FindingsThe results showed that IPOs with earnings forecasts obtained higher oversubscription rates than those without earnings forecasts. IPOs with earnings forecasts provide value-relevant signals to prospective investors about the good prospects of firms, resulting in an increase in the demand for IPO shares. For the IPO samples listed during the global financial crisis (GFC) period, IPOs with earnings forecasts had negative impacts on the oversubscription rates. These results were robust to quantile methods and the two-stage least squares method.Research limitations/implicationsThe research findings provide fresh information for investors regarding the importance of earnings forecasts as a trustworthy signal of a firm’s quality when making share subscription decisions.Practical implicationsThe regulator is advised to encourage issuers to include earnings forecasts in their prospectuses since such forecasts help to increase the demand for IPOs.Originality/valueThis study contributes to the literature by offering empirical evidence regarding the signalling impact of earnings forecast disclosures on investor demands for Malaysian IPOs. Moreover, this study provides evidence demonstrating the impact of earnings forecast disclosures on oversubscription rates of Malaysian IPOs during the GFC period.

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Signalling Effect of Auditor Reputation and Lock-Up Period on Over-Subscription Ratio: Evidence from Malaysian Fixed-Price IPOs

Cited by 2 publications

References 51 publications

Predictive Role of Ex Ante Strategic Firm Characteristics for Sustainable Initial Public Offering (IPO) Survival

Predictive Role of Ex Ante Strategic Firm Characteristics for Sustainable Initial Public Offering (IPO) Survival

Earnings forecast disclosures and oversubscription rates of fixed-price initial public offerings (IPOs): the case of Malaysia

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