Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia
Purpose – The purpose of this study is to examine the influence of underwriter reputation on the valuation of Malaysian initial public offerings (IPOs). Design/methodology/approach – This study employed cross-sectional multiple regression models to analyse the relationship between underwriter reputa...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Emerald Publishing Limited
2020
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| Subjects: | |
| Online Access: | https://repo.uum.edu.my/id/eprint/27064/1/MF%202020%201%2022.pdf |
| _version_ | 1825805584013721600 |
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| author | Chui, Zi Ong Mohd Rashid, Rasidah Taufil Mohd, Kamarun Nisham |
| author_facet | Chui, Zi Ong Mohd Rashid, Rasidah Taufil Mohd, Kamarun Nisham |
| author_sort | Chui, Zi Ong |
| collection | UUM |
| description | Purpose – The purpose of this study is to examine the influence of underwriter reputation on the valuation of Malaysian initial public offerings (IPOs). Design/methodology/approach – This study employed cross-sectional multiple regression models to analyse the relationship between underwriter reputation and IPO valuation that included 466 IPOs listed on Bursa Malaysia from 2000 to 2017. Findings – The results revealed that underwriter reputation had a significant negative association with IPO valuation. Firms that engaged the services of reputable underwriters had their IPO offer prices set lower than the intrinsic values during the listing. After incorporating firms’ size, this study found a positive relationship between underwriter reputation and IPO valuation. Big firms (high quality) hired reputable underwriters for certification purposes as issuers were aware that the cost of hiring a reputable underwriter would be justified by increased transparency after listing. Therefore, firms that engaged reputable underwriters had
approximately fair values since issuers assumed that the price would be close to the intrinsic value following enhanced transparency post-listing. Research limitations/implications – Future studies should focus on other non-financial factors, such as auditor reputation. Originality/value – The present study provides new insights into the certification role of underwriters in valuing IPOs in the Malaysian market. |
| first_indexed | 2024-07-04T06:34:41Z |
| format | Article |
| id | uum-27064 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T06:34:41Z |
| publishDate | 2020 |
| publisher | Emerald Publishing Limited |
| record_format | eprints |
| spelling | uum-270642020-06-04T01:36:09Z https://repo.uum.edu.my/id/eprint/27064/ Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia Chui, Zi Ong Mohd Rashid, Rasidah Taufil Mohd, Kamarun Nisham HB Economic Theory Purpose – The purpose of this study is to examine the influence of underwriter reputation on the valuation of Malaysian initial public offerings (IPOs). Design/methodology/approach – This study employed cross-sectional multiple regression models to analyse the relationship between underwriter reputation and IPO valuation that included 466 IPOs listed on Bursa Malaysia from 2000 to 2017. Findings – The results revealed that underwriter reputation had a significant negative association with IPO valuation. Firms that engaged the services of reputable underwriters had their IPO offer prices set lower than the intrinsic values during the listing. After incorporating firms’ size, this study found a positive relationship between underwriter reputation and IPO valuation. Big firms (high quality) hired reputable underwriters for certification purposes as issuers were aware that the cost of hiring a reputable underwriter would be justified by increased transparency after listing. Therefore, firms that engaged reputable underwriters had approximately fair values since issuers assumed that the price would be close to the intrinsic value following enhanced transparency post-listing. Research limitations/implications – Future studies should focus on other non-financial factors, such as auditor reputation. Originality/value – The present study provides new insights into the certification role of underwriters in valuing IPOs in the Malaysian market. Emerald Publishing Limited 2020 Article PeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/27064/1/MF%202020%201%2022.pdf Chui, Zi Ong and Mohd Rashid, Rasidah and Taufil Mohd, Kamarun Nisham (2020) Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia. Managerial Finance, ahead- (ahead-). pp. 1-22. ISSN 0307-4358 http://doi.org/10.1108/MF-11-2019-0579 doi:10.1108/MF-11-2019-0579 doi:10.1108/MF-11-2019-0579 |
| spellingShingle | HB Economic Theory Chui, Zi Ong Mohd Rashid, Rasidah Taufil Mohd, Kamarun Nisham Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia |
| title | Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia |
| title_full | Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia |
| title_fullStr | Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia |
| title_full_unstemmed | Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia |
| title_short | Underwriter reputation and IPO valuation in an emerging market: evidence from Malaysia |
| title_sort | underwriter reputation and ipo valuation in an emerging market evidence from malaysia |
| topic | HB Economic Theory |
| url | https://repo.uum.edu.my/id/eprint/27064/1/MF%202020%201%2022.pdf |
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