Under-Pricing and Listing Board in Explaining Heterogeneity of Opinion Regarding Values of Malaysian IPOs

Othman Yong, Ali Z.A. Albada

Abstract


ABSTRACT

Heterogeneity of opinion regarding the value of an initial public offering (IPO) is arguably high due to the lack of prior information on the IPO. This situation is especially true in the case of a fixed-price IPO where, unlike book-building and auction offering methods, potential investors do not have the opportunity to “reveal” their private valuations of the IPO. Using a sample of 112 fixed-price Malaysian IPOs from January 2009 to December 2015, and employing OLS regression together with stepwise regression and hierarchical multiple regression, the objective of this study is to examine the level of under-pricing as the main factor that can possibly explain the heterogeneity of opinion among investors regarding the true value of a fixed-price IPO. The study found that the level of under-pricing, together with control variable ACE Market versus Main Market can explain 50.7 percent of the variation in the heterogeneity of opinion regarding the value of Malaysian fixed-price IPOs. The novelty of this study as opposed to an earlier study by Low and Yong (2013) is in terms of the more rigorous method employed in the form of not just the OLS, but also the stepwise and the hierarchical multiple regressions. This study also offered an improved model with higher R2. The results have some policy implications for the regulatory bodies of Bursa Malaysia in terms of special attention to IPOs listed on the ACE market due to their high initial return and price spread which could be due to excessive speculation.

Keywords: IPO; Malaysian IPOs; under-pricings; heterogeneity of opinion; price spread

ABSTRAK

Perbezaan pendapat tentang nilai sesuatu tawaran awam awal (TAA) adalah tinggi disebabkan kekurangan maklumat tentang TAA tersebut. Situasi ini lebih menonjol dalam kes TAA jenis harga tetap kerana bakal pelabur tidak berpeluang untuk mendedahkan penilaian persendirian mereka terhadap TAA tersebut, tidak sebagaimana TAA jenis “bookbuilding” mahupun jenis lelongan. Dengan menggunakan sampel 112 TAA Malaysia jenis harga tetap untuk tempoh dari Januari 2009 hingga Disember 2015, dan dengan menggunakan kaedah OLS berserta regresi “stepwise” dan “hierarchical,” objektif kajian ini ialah untuk meneliti tahap terkurang harga sebagai faktor utama yang boleh menerangkan perbezaan pendapat di kalangan para pelabur tentang nilai sebenar sesuatu TAA jenis harga tetap. Kajian ini mendapati bahawa tahap terkurang harga beserta pemboleh ubah kawalan Pasaran ACE lawan Pasaran Utama boleh menerangkan 50.7 peratus kelainan pada perbezaan pendapat tentang nilai TAA Malaysia jenis harga tetap. Sesuatu yang baharu yang dibawa oleh kajian ini berbanding kajian sebelum ini oleh Low and Yong (2013) ialah daripada segi kaedah kajian yang lebih mantap dalam bentuk bukan sahaja OLS tetapi juga regresi “stepwise” dan “hierarchical” yang digunakan untuk menyokong keputusan yang diberikan oleh kaedah regresi OLS. Tambahan pula, kajian ini berjaya menemukan model yang lebih baik daripada sebelumnya dengan nilai R2 yang lebih tinggi. Keputusan kajian juga mempunyai implikasi polisi daripada segi perhatian khusus perlu diberikan oleh pihak berwajib Bursa Malaysia kepada TAA yang tersenarai di pasaran ACE disebabkan pulangan awal dan pembezaan harganya yang tinggi berkemungkinan disebabkan aktiviti spekulasi yang melampau.

Kata kunci: TAA; TAA Malaysia; terkurang harga; perbezaan pendapat; pembezaan harga


Full Text:

PDF

Refbacks

  • There are currently no refbacks.


DISCLAIMER

The editors and publisher of Jurnal Pengurusan have made every possible effort to verify the accuracy of all information contained in this publication. Any opinions, discussions, views and recommendations expressed in the article are solely those of the authors and are not of Jurnal Pengurusan, its editors or its publisher. Jurnal Pengurusan, its editors and its publisher will not be liable for any direct, indirect, consequential, special, exemplary, or other damages arising therefrom.