Explaining over-subscription in fixed-price IPOs - Evidence from the Malaysian stock market

Research output: Contribution to journalArticle

22 Citations (Scopus)

Abstract

This paper examines the link between over-subscription and pre-listing information in fixed-price IPOs. We find a strong negative relation between investors' opportunity cost of fund and over-subscription. Since investors are required to make upfront payment at the time of IPO applications, lengthy offer period increases investors' opportunity cost of fund and thus reduces their interests in the IPOs. To increase over-subscription, firms should time their IPOs to coincide with periods of large positive initial returns and low volume of IPO activity. We find that over-subscription is negatively correlated with offer price but is not significantly related to issue size.

Original languageEnglish
Pages (from-to)205-216
Number of pages12
JournalEmerging Markets Review
Volume12
Issue number3
DOIs
Publication statusPublished - Sep 2011

Fingerprint

Fixed price
Stock market
Subscription
Investors
Opportunity cost
Investor relations
Payment

Keywords

  • Fixed price mechanism
  • Hot issue market
  • Initial public offerings
  • Opportunity cost of fund
  • Over-subscription

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics

Cite this

Explaining over-subscription in fixed-price IPOs - Evidence from the Malaysian stock market. / Low, Soo Wah; Yong, Othman.

In: Emerging Markets Review, Vol. 12, No. 3, 09.2011, p. 205-216.

Research output: Contribution to journalArticle

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