LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIA
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 rel...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Universiti Utara Malaysia
2020-03-01
|
| Series: | The International Journal of Banking and Finance |
| Subjects: | |
| Online Access: | https://e-journal.uum.edu.my/index.php/ijbf/article/view/9929 |
| _version_ | 1797707301376753664 |
|---|---|
| author | Chui Zi Ong Rasidah Mohd-Rashid Kamarun Nisham Taufil-Mohd |
| author_facet | Chui Zi Ong Rasidah Mohd-Rashid Kamarun Nisham Taufil-Mohd |
| author_sort | Chui Zi Ong |
| collection | DOAJ |
| description | 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.
|
| first_indexed | 2024-03-12T06:04:23Z |
| format | Article |
| id | doaj.art-069aad5ef5c643b58adaefa7fe44e534 |
| institution | Directory Open Access Journal |
| issn | 2811-3799 2590-423X |
| language | English |
| last_indexed | 2024-03-12T06:04:23Z |
| publishDate | 2020-03-01 |
| publisher | Universiti Utara Malaysia |
| record_format | Article |
| series | The International Journal of Banking and Finance |
| spelling | doaj.art-069aad5ef5c643b58adaefa7fe44e5342023-09-03T03:44:13ZengUniversiti Utara MalaysiaThe International Journal of Banking and Finance2811-37992590-423X2020-03-0115110.32890/ijbf2020.15.1.9929LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIAChui Zi OngRasidah Mohd-RashidKamarun Nisham Taufil-Mohd0School of Economics, Finance and Banking, Universiti Utara Malaysia, MalaysiaThe 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. https://e-journal.uum.edu.my/index.php/ijbf/article/view/9929Fixed-price mechanisminitial public offerings,leverageoffer priceinformation asymmetry |
| spellingShingle | Chui Zi Ong Rasidah Mohd-Rashid Kamarun Nisham Taufil-Mohd LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIA The International Journal of Banking and Finance Fixed-price mechanism initial public offerings, leverage offer price information asymmetry |
| title | LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIA |
| title_full | LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIA |
| title_fullStr | LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIA |
| title_full_unstemmed | LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIA |
| title_short | LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIA |
| title_sort | leverage and ipo pricing evidence from malaysia |
| topic | Fixed-price mechanism initial public offerings, leverage offer price information asymmetry |
| url | https://e-journal.uum.edu.my/index.php/ijbf/article/view/9929 |
| work_keys_str_mv | AT chuiziong leverageandipopricingevidencefrommalaysia AT rasidahmohdrashid leverageandipopricingevidencefrommalaysia AT kamarunnishamtaufilmohd leverageandipopricingevidencefrommalaysia |