Heterogeneity of opinion, shareholder retention ratio and lockup period: Malaysian evidence

Ali Albada, Low Soo-Wah, Othman Yong, Annuar Md Nassir, Fakarudin Kamarudin, Nazratul Aina Mohamad Anwar

Research output: Contribution to journalArticle

Abstract

This paper examines the effects of the lock-up period and shareholder retention ratio on the heterogeneity of investors beliefs regarding the true value of IPOs in the Malaysian IPO market. The relationship between the signalling variables and the first-day price range of IPOs is examined using a quantile regression (QR) technique. This study employs a sample of 377 IPOs issued between January 2000 and December 2015. The results show that shareholder retention ratio has a significant negative relationship with the first-day price range, while the lock-up period does not have a significant relationship with the first-day price range. This suggests that prospective investors acknowledge the importance of the shareholder retention ratio as a signal and use the information conveyed by this signal to evaluate the price of the listing firm's IPO and to ensure that the current price reflects their beliefs and expectations of the firm in general and the issue price in particular. Finally, the lock-up in the Malaysian market serves as precautionary measure to guard the investors against after-market insiders' actions.

Original languageEnglish
Pages (from-to)231-248
Number of pages18
JournalInternational Journal of Economics and Management
Volume13
Issue number1
Publication statusPublished - Jun 2019

Fingerprint

Shareholders
Investors
Quantile regression
Aftermarket
Insider

Keywords

  • Heterogeneity of opinion
  • Initial public offerings
  • Lock-up period
  • Quantile regression
  • Shareholder retention ratio
  • Signalling

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance(all)
  • Strategy and Management

Cite this

Heterogeneity of opinion, shareholder retention ratio and lockup period : Malaysian evidence. / Albada, Ali; Soo-Wah, Low; Yong, Othman; Nassir, Annuar Md; Kamarudin, Fakarudin; Anwar, Nazratul Aina Mohamad.

In: International Journal of Economics and Management, Vol. 13, No. 1, 06.2019, p. 231-248.

Research output: Contribution to journalArticle

Albada, Ali ; Soo-Wah, Low ; Yong, Othman ; Nassir, Annuar Md ; Kamarudin, Fakarudin ; Anwar, Nazratul Aina Mohamad. / Heterogeneity of opinion, shareholder retention ratio and lockup period : Malaysian evidence. In: International Journal of Economics and Management. 2019 ; Vol. 13, No. 1. pp. 231-248.
@article{a9de37a04a1648c8a313c626ea8846d1,
title = "Heterogeneity of opinion, shareholder retention ratio and lockup period: Malaysian evidence",
abstract = "This paper examines the effects of the lock-up period and shareholder retention ratio on the heterogeneity of investors beliefs regarding the true value of IPOs in the Malaysian IPO market. The relationship between the signalling variables and the first-day price range of IPOs is examined using a quantile regression (QR) technique. This study employs a sample of 377 IPOs issued between January 2000 and December 2015. The results show that shareholder retention ratio has a significant negative relationship with the first-day price range, while the lock-up period does not have a significant relationship with the first-day price range. This suggests that prospective investors acknowledge the importance of the shareholder retention ratio as a signal and use the information conveyed by this signal to evaluate the price of the listing firm's IPO and to ensure that the current price reflects their beliefs and expectations of the firm in general and the issue price in particular. Finally, the lock-up in the Malaysian market serves as precautionary measure to guard the investors against after-market insiders' actions.",
keywords = "Heterogeneity of opinion, Initial public offerings, Lock-up period, Quantile regression, Shareholder retention ratio, Signalling",
author = "Ali Albada and Low Soo-Wah and Othman Yong and Nassir, {Annuar Md} and Fakarudin Kamarudin and Anwar, {Nazratul Aina Mohamad}",
year = "2019",
month = "6",
language = "English",
volume = "13",
pages = "231--248",
journal = "International Journal of Economics and Management",
issn = "1823-836X",
publisher = "Universiti Putra Malaysia",
number = "1",

}

TY - JOUR

T1 - Heterogeneity of opinion, shareholder retention ratio and lockup period

T2 - Malaysian evidence

AU - Albada, Ali

AU - Soo-Wah, Low

AU - Yong, Othman

AU - Nassir, Annuar Md

AU - Kamarudin, Fakarudin

AU - Anwar, Nazratul Aina Mohamad

PY - 2019/6

Y1 - 2019/6

N2 - This paper examines the effects of the lock-up period and shareholder retention ratio on the heterogeneity of investors beliefs regarding the true value of IPOs in the Malaysian IPO market. The relationship between the signalling variables and the first-day price range of IPOs is examined using a quantile regression (QR) technique. This study employs a sample of 377 IPOs issued between January 2000 and December 2015. The results show that shareholder retention ratio has a significant negative relationship with the first-day price range, while the lock-up period does not have a significant relationship with the first-day price range. This suggests that prospective investors acknowledge the importance of the shareholder retention ratio as a signal and use the information conveyed by this signal to evaluate the price of the listing firm's IPO and to ensure that the current price reflects their beliefs and expectations of the firm in general and the issue price in particular. Finally, the lock-up in the Malaysian market serves as precautionary measure to guard the investors against after-market insiders' actions.

AB - This paper examines the effects of the lock-up period and shareholder retention ratio on the heterogeneity of investors beliefs regarding the true value of IPOs in the Malaysian IPO market. The relationship between the signalling variables and the first-day price range of IPOs is examined using a quantile regression (QR) technique. This study employs a sample of 377 IPOs issued between January 2000 and December 2015. The results show that shareholder retention ratio has a significant negative relationship with the first-day price range, while the lock-up period does not have a significant relationship with the first-day price range. This suggests that prospective investors acknowledge the importance of the shareholder retention ratio as a signal and use the information conveyed by this signal to evaluate the price of the listing firm's IPO and to ensure that the current price reflects their beliefs and expectations of the firm in general and the issue price in particular. Finally, the lock-up in the Malaysian market serves as precautionary measure to guard the investors against after-market insiders' actions.

KW - Heterogeneity of opinion

KW - Initial public offerings

KW - Lock-up period

KW - Quantile regression

KW - Shareholder retention ratio

KW - Signalling

UR - http://www.scopus.com/inward/record.url?scp=85069497595&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85069497595&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:85069497595

VL - 13

SP - 231

EP - 248

JO - International Journal of Economics and Management

JF - International Journal of Economics and Management

SN - 1823-836X

IS - 1

ER -