THE ANALYSIS OF SHORT-RUN AND LONG-RUN PERFORMANCE OF PRIVATIZATION INITIAL PUBLIC OFFERINGS IN MALAYSIA

Isnurhadi, Isnurhadi and AK, Syamsurijal and Hamdan, Umar and Puspowarsito, Herianto (2008) THE ANALYSIS OF SHORT-RUN AND LONG-RUN PERFORMANCE OF PRIVATIZATION INITIAL PUBLIC OFFERINGS IN MALAYSIA. 8th Global Conference on Business and Economics . University of Florence, Florence, Italy, pp. 1-38. ISBN 978-0-9742114-5-9

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        Abstract

        Privatization is a government policy of transferring state ownership of state-owned enterprises to private. It is a multipurpose program aimed at improving the performance of state-owned enterprises. One methods of privatization is selling stocks in a capital market. The objective of this article is to evaluate the performance of privatization initial public offerings (IPOs) in Malaysia and to investigate the determinants of the short-run and the long-run of IPOs performance. Data used in this study comes from single country which is more homogeneous. In addition, this study uses a theory on IPO introduced by Perotti and Enrico (1995) which specifically deals with privatization IPOs. Finally, this study produces information about the degree of initial excess return and long-run return of privatized IPOs up to five years and their determinants which are valuable to investors in designing their security selection processes. The evidence indicated that, on average, the IPOs are underpriced. This is in line with the evidences from private sector IPOs. On the other hand, the IPOs show a pattern of underperformance (negative returns) in the long-run up to five years. However, the statistical evidence showed that in the long-run the IPOs are neither under nor overpriced. Through statistical analysis of the dependency of several independent variables it is found that the percentage of share sold, the uncertainty about the future value of the firm, the market index fluctuation, the size of firm and the value of issue on the first day of trading are significantly influence the initial excess returns. On the other hand, the degree of the initial returns is the only variable that significantly affects the long-run IPOs performance.

        Item Type: Book
        Subjects: H Social Sciences > HG Finance
        Divisions: Faculty of Economics > Department of Management
        Depositing User: Isnurhadi, SE, MBA, Ph.D
        Date Deposited: 19 Mar 2014 11:57
        Last Modified: 19 Mar 2014 11:57
        URI: http://eprints.unsri.ac.id/id/eprint/3657

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