Impact of a regulatory change on initial performance of IPOs

Rasidah Mohd-Rashid, Ruzita Abdul Rahim, Norliza Che-Yahya, Ahmad Hakimi Tajuddin

Research output: Contribution to journalArticle

Abstract

The purpose of this paper is to examine the impact of the Malaysian IPO regulatory change involving lock-up provisions on the initial performance of Malaysian IPOs. This study examines the impact of the revision in the IPO lock-up provision that took effect on February 2008 on the initial returns of 373 IPOs listed between January 2000 and December 2012, using cross-sectional multiple regressions. The findings indicate that the dummy of the lock-up period is positive and significant, validating that the dramatic drop in initial performance of Malaysian IPOs is an attribute of the shorter lock-up period regime. The new shorter lock-up period regime leaves fewer opportunities for speculation activities through IPOs. Investors may strategise to participate in firms that report higher lock-up ratio as it is likely to increase the initial returns.

Original languageEnglish
Pages (from-to)332-348
Number of pages17
JournalAfro-Asian Journal of Finance and Accounting
Volume9
Issue number3
DOIs
Publication statusPublished - 1 Jan 2019

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Regulatory change
Investors
Speculation
Multiple regression

Keywords

  • Asian
  • Bumiputera requirement
  • Initial performance
  • IPOs
  • Lock-up period
  • Lock-up ratio
  • Malaysia
  • Multiple regressions
  • Regulatory
  • Signalling

ASJC Scopus subject areas

  • Accounting
  • Finance

Cite this

Impact of a regulatory change on initial performance of IPOs. / Mohd-Rashid, Rasidah; Abdul Rahim, Ruzita; Che-Yahya, Norliza; Tajuddin, Ahmad Hakimi.

In: Afro-Asian Journal of Finance and Accounting, Vol. 9, No. 3, 01.01.2019, p. 332-348.

Research output: Contribution to journalArticle

Mohd-Rashid, Rasidah ; Abdul Rahim, Ruzita ; Che-Yahya, Norliza ; Tajuddin, Ahmad Hakimi. / Impact of a regulatory change on initial performance of IPOs. In: Afro-Asian Journal of Finance and Accounting. 2019 ; Vol. 9, No. 3. pp. 332-348.
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