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2018 | vol. 14, iss. 4 | 818--828
Tytuł artykułu

The Influence of "Offer for Sale" By Existing Shareholders on Investors' Reaction in the IPO Immediate Aftermarket

Warianty tytułu
Języki publikacji
EN
Abstrakty
EN
This study investigates the influence of "offer for sale" by existing shareholders on investors' reaction in the IPO immediate aftermarket. The "offer for sale" is measured by the proportion of shares offered to public from the sale of the existing shareholdings prior to IPO against the total number of shares offered during IPO. The "offer for sale" activity suggests that proceed from the shares sold at an IPO would go into the pocket of the existing shareholders. That is, the proceed does not actually meet the primary goals of the IPO to raise funds for business expansion. IPO firms that go public mainly through "offer for sale" activity are expected to receive less demand during IPO from potential investors as the investors are less optimistic in firms which their shares are offered mostly through "offer for sale" activity relative to firms which their shares are newly issued. Thus, firms which their shares are offered through "offer for sale" activity are predicted to produce poor initial aftermarket return and trading. Using a final sample of 419 Malaysian IPOs issued from January 2000 to December 2015, regression results of this study reveal that firms which their shares are offered highly through "offer for sale" report poor and lower initial aftermarket return and trading volume. The results support the proposition of this study that investors are less optimistic in firms which their shares are offered mostly through "offer for sale" activity. (original abstract)
Rocznik
Strony
818--828
Opis fizyczny
Twórcy
  • Universiti Teknologi MARA, Puncak Alam, Malaysia
  • Universiti Kebangsaan Malaysia, Malaysia
  • University Utara Malaysia, Malaysia
Bibliografia
  • Abdul Rahim, R., Che Embi, N. A., & Yong, O. (2012). Winner's curse and IPO initial performance. New evidence from Malaysia. International Journal of Business and Management Studies, 4(2), 151-159.
  • Abdul Rahim, R., Sapian, R. Z. Z., Yong, O., & Auzairy, N. A. (2013). Flipping activity and subsequent aftermarket trading in Malaysian IPOs. Asian Academy of Management Journal of Accounting and Finance, 9(1), 113-128.
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  • Che Yahya, N. Abdul Rahim, R., & Yong, O. (2014). Influence of institutional investors‟ participation on flipping activity of Malaysian IPOs. Economic Systems, 38, 470-486.
  • Che Yahya, N., & Abdul Rahim, R. (2015). Role of lockup provision and institutional investors' participation in restricting flipping activity. Is there a moderating effect of investor demand?. Asian Academy of Management Journal of Accounting and Finance, 11(2), 1-29.
  • Chua, A., & Naseer, T. (2016). Insider sales in IPOs: consequences of liquidity needs. Journal of Corporate Finance, 39, 1-17.
  • Chong, F. N., Ahmad, Z., & Ali, R. (2011). Representative heuristics and the aftermarket dynamics of the new listings in Malaysia. Labuan Bulletin of International Business and Finance, 9, 1-11.
  • Chong, F. N., Ali, R., & Ahmad, Z. (2009). Does noise signal affect flipping activities. International Journal of Banking and Finance, 6(2), 111-127.
  • Espinasse, P. (2011). IPO. A global guide. Hong Kong University Press.
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  • Gounopoulos, D. (2006). Activity in fixed offer price mechanism Allocated IPOs. Unpublished Manuscript. University of Surrey. United Kingdom.
  • Mayur., M., & Kumar., M. (2013). Determinants of going-public decision in an emerging market: evidence from India. Vikalpa: The Journal for Decision Makers, 38(1), 65-86.
  • Mohan, J. N., & Chen, R. C. (2001). Information content of lock-up provision in initial public offerings. International Review of Economics and Finance, 10(1), 41-59.
  • Mohd Rashid, R., Abdul Rahim, R., & Che-Yahya, N. (2016). Shareholder retention influence on the flipping activity of Malaysian IPOs. Pertanika Journal of Social Science and Humanity, 24(S), 133-144.
  • Mohd Rashid, R., Abdul Rahim, R., & Yong, O. (2014). The influence of lock-up provisions on IPO initial returns: Evidence from an emerging market. Economic Systems 38, 487-501.
  • Ritter, J. R., & Welch, I. (2002). A review of IPO activity, pricing and allocation. Journal of Finance, 57(4), 1795-1829.
  • Sapian, R. Z. Z., Abdul Rahim, R., & Yong, O. (2012). Underpricing, flipping activity and aftermarket liquidity of IPOs. Jurnal Pengurusan, 34, 29-43.
  • Schaub, M., Casey, K., & Washer, K (2004). Banking Industry IPO Returns: A Test of the Informational Asymmetry Hypothesis. Southwest Business and Economics Journal. 18-24.
  • Scott, J., & Xu, P. (2004). Some insider sales are positive signals. Financial Analysts Journal, 60(3), 44-51.
  • Wan-Hussin, N. W. (2005). The effects of owners' participation and lockup on IPO underpricing in Malaysian. Asian Academy of Management Journal, 10(1), 19-36.
  • Yong, O. (2010). Initial premium, flipping activity and opening-day price spread of Malaysian IPOs. Capital Markets Review, 18(1), 45-61.
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Typ dokumentu
Bibliografia
Identyfikatory
Identyfikator YADDA
bwmeta1.element.ekon-element-000171529476

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