Underpricing of new securities : is it accounting or finance that matters? A study on the Bursa Malaysia companies; Study on the Bursa Malaysia companies
Underpricing of new securities : is it accounting or finance that matters? A study on the Bursa Malaysia companies; Study on the Bursa Malaysia companies
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2013-00-00
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Rajangam, Nakiran
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Abstract : A large theoretical and empirical literature has been established to explain the reasons for under-pricing but, in the Malaysian context, minimal research has been undertaken with regard to the impact of accounting variables on under-pricing of new securities. Thus, this study plans to bridge the gap by making a comparison on the significance of accounting and finance variables on the extent of under-pricing of new securities. Finance will be represented by volatility of returns, age, company size, lag and insider holdings. The Accounting variables used are Earnings per share (EPS), Price-Earnings Ratio (P/E ratio) and Net Tangible Assets (NTA). Multiple linear regression model is used to examine the explanatory power of both finance and accounting variables. A total of 165 new securities listed on Main Board, Second Board and the MESDAQ are selected over the period of 2001 – 2005 to form the sample for this study. The empirical results suggest that P/E ratio and NTA have significant impact on under-pricing of new issues, whilst for the finance variables, only volatility of returns seem to be significant.
Full text access : Research & development Centre, Taylor’s University, Malaysia (e-mail: GTDLSRnD@taylors.edu.my)
Full text access : Research & development Centre, Taylor’s University, Malaysia (e-mail: GTDLSRnD@taylors.edu.my)
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Underpricing of new securities : is it accounting or finance that matters? A study on the Bursa Malaysia companies; Study on the Bursa Malaysia companies
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Rajangam, Nakiran
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2013-00-00
Description
Abstract : A large theoretical and empirical literature has been established to explain the reasons for under-pricing but, in the Malaysian context, minimal research has been undertaken with regard to the impact of accounting variables on under-pricing of new securities. Thus, this study plans to bridge the gap by making a comparison on the significance of accounting and finance variables on the extent of under-pricing of new securities. Finance will be represented by volatility of returns, age, company size, lag and insider holdings. The Accounting variables used are Earnings per share (EPS), Price-Earnings Ratio (P/E ratio) and Net Tangible Assets (NTA). Multiple linear regression model is used to examine the explanatory power of both finance and accounting variables. A total of 165 new securities listed on Main Board, Second Board and the MESDAQ are selected over the period of 2001 – 2005 to form the sample for this study. The empirical results suggest that P/E ratio and NTA have significant impact on under-pricing of new issues, whilst for the finance variables, only volatility of returns seem to be significant.
Full text access : Research & development Centre, Taylor’s University, Malaysia (e-mail: GTDLSRnD@taylors.edu.my)
Full text access : Research & development Centre, Taylor’s University, Malaysia (e-mail: GTDLSRnD@taylors.edu.my)
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Securities--Malaysia
Earnings per share--Malaysia
Price-earnings ratio–Malaysia
Earnings per share--Malaysia
Price-earnings ratio–Malaysia
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Taylor's Business School