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Individual Investors Participation And Divergence Of Opinion In New Issue Markets: Evidence From Malaysia

Author

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  • Cheedradevi Narayanasamy
  • Izani Ibrahim
  • Yeoh Ken Kyid

Abstract

We investigate the effects of individual investors participation on after-market divergence of opinion (DOP) for 269 Malaysian fixed-price initial public offerings (IPOs). Our findings show that individual investor participation moderates the relationship between initial performance and after-market investors opinion. Furthermore, our findings suggest that individual investors who participate in initial public offerings dispose their holdings quickly to take advantage of DOP in the after-market. However, the aftermarket investors are not willing to pay higher for IPOs sold by the participating individual investors. Our analysis across market conditions shows that the initial performance of IPOs with greater individual investor participation in (i) hot issues is inversely related to after-market DOP and, (ii) cold issues is positively related to after-market DOP (indicating signs of aversion to losses).

Suggested Citation

  • Cheedradevi Narayanasamy & Izani Ibrahim & Yeoh Ken Kyid, 2018. "Individual Investors Participation And Divergence Of Opinion In New Issue Markets: Evidence From Malaysia," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 12(1), pages 1-22.
    • Handle: RePEc:ibf:ijbfre:v:12:y:2018:i:1:p:1-22
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    References listed on IDEAS

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    More about this item

    Keywords

    Divergence of Opinion; Individual Investor Participation; Post-IPO Performance; Offer Turnover; Underpriced IPOs; Loss Aversion;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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