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Title: Evaluation of the market performance and survival of initial public offerings (IPOs) and its determinants : evidence from the Malaysian market
Author: Shari, Wahidah
ISNI:       0000 0004 7658 9376
Awarding Body: University of Aberdeen
Current Institution: University of Aberdeen
Date of Award: 2018
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This thesis addresses three broad issues of initial public offering (IPO) launched in Malaysia over 2002–2016. First and second issues deal with the underpricing and long-term performance of IPOs. Previous studies have found that IPOs are underpriced in the short-term (Loughran, Ritter, & Rydqvist, 1994) yet underperform in the long term (Aggarwal & Rivoli, 1990; T. Loughran & Ritter, 1995; Ritter, 1991). The underpricing puzzle describes the phenomenon whereby short-term returns are generally positive (Ibbotson, 1975). This study also identifies the determinants of the underpricing and long-term performance of Malaysian IPOs. The finding shows that Malaysian IPOs are significantly underpriced by 24.8 per cent using offerto-close return (OTC), which confirms the findings reported in previous literature. Separating OTC to offer-to-ask (OTA) and ask-to-close (ATC) indicates that a significant positive return is observed only in the OTA period but not in the ATC period. This study also finds that the positive returns observed on the first trading day continue for up to two weeks of trading (CAR=4.4%). OLS regression on the determinants of underpricing reveals that issue-specific characteristics are more likely to influence the variation of underpricing in Malaysian IPOs. Contradictory to the poor long-term performance widely reported in the US market, Malaysian IPOs appear to outperform in the five-year period. The evidence is robust across three different measures (CAR, BHAR, and WR). The results also reveal that early after market volatility (VOLATILITY), concentrated ownership (TOPHOLD), and dummy ACE market (D_ACE) significantly influence the long-term IPO performance. Finally, this thesis addresses the extent to which Malaysian public listed firms survive after the IPO and what determines their survival. A survivor is defined as a firm that continues to be listed in the market or transferred to another market as of 31 December 2017. The result reports that 7.72% of Malaysian IPOs were delisted from the market after five years, which is lower than the delisting rate reported in previous studies in developed markets. The delisting rate increased to 13.2% after seven years of listing. Further investigation shows that an unsatisfactory financial condition is the primary factor of failure. Identification of the determinants of post-IPO survival using the Accelerated Failure Time and Cox Proportional Hazard models shows that the percentage of insider-retained ownership after the IPO (RETAIN_OWN), percentage of government shareholding (GOVHOLD), reputable underwriter (UW_CHAR2), leverage level (LEV), and initial underpricing (UNDERPRICE) have significant effect on a firm's survival post-IPO.
Supervisor: MacGregor, Bryan D. ; Schulz, Rainer Sponsor: Malaysian Ministry of Education ; Universiti Utara Malaysia
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Going public (Securities) ; Markets