The Malaysian initial public offerings (IPOs) : Factors affecting the short run and the long run performance

Chang, Tze Kuch. (2016) The Malaysian initial public offerings (IPOs) : Factors affecting the short run and the long run performance. Masters thesis, UNIMAS.

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Abstract

This paper presents the levels of underpricing for new issues in Malaysia over a more recent period, 2000- 2009 and the factors affecting the short run and the long run performance. The international evidence unanimously suggests that IPOs generate positive initial returns. However, a number of topics are still controversial, particularly the nature of the long run performance of IPOs companies. This paper aims to study the short run returns and long run stock price performance of Malaysian IPO. We use regression analysis to test the relationship between total underpricing, and the six factors that expected to have an effect on the IPOs return and examining the factors associated with short run return and long run IPO price performance. The final sample in this paper is 343 new listing companies in Malaysia between 2000- 2009. However in long run, we found that using the BHAR method to measure the long run share price performance, the Malaysian IPOs companies underperformed in the market in the first year of going public, with BHAR of -1.77 percent. However, in the second and third year after going public, these companies outperformed in the market with a BHAR of 4.79 percent and 40.83 percent, respectively.

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