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The Investment Performance of MESDAQ Market Initial Public Offerings (IPOs)

Author

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  • Nurwati A. Ahmad-Zaluki

    (School of Business, University College Dublin
    Graduate School of Business, Universiti Utara Malaysia, 06010 UUM Sintok, Kedah, Malaysia)

  • Lim Boon Kect

    (Ecu-Line Singapore Pte Ltd, 237 Pandan Loop, #06-07, Westech Building, Singapore 128424)

Abstract

This study provides evidence on both the short-run and long-run investment performance of Malaysian initial public offering (IPO) companies that are listed on the MESDAQ Market. The factors that influence the performance are also investigated. In line with past Malaysian studies, the results of the raw and market-adjusted initial returns show that IPO companies are significantly underpriced in the short-run. However, in the long-run, both the CAR and the BHAR methods reveal that these companies underperform the market. Our results concerning the long-run performance contrast with the results observed by previous Malaysian studies using a sample of companies listed on the Main Board and/or the Second Board. However, they are consistent with the results reported in other countries. We find that companies in the technology sector, issued in a hot issue period and underpriced IPO, perform less well in the long-run, which supports the fad hypothesis of long-run underperformance. Our results suggest that investors who purchase IPO shares on the MESDAQ Market gain high positive returns in the short-run but do not fare well in the long-run. This study provides new information to investors when choosing IPOs listed on Bursa Malaysia. Classification-JEL:

Suggested Citation

  • Nurwati A. Ahmad-Zaluki & Lim Boon Kect, 2012. "The Investment Performance of MESDAQ Market Initial Public Offerings (IPOs)," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 8(1), pages 1-23.
    • Handle: RePEc:usm:journl:aamjaf00801_1-23
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    Citations

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    Cited by:

    1. 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.
    2. Nischay Arora & Balwinder Singh, 2024. "Do Prestigious Underwriters Shape the Performance of SME IPOs in India?," Global Business Review, International Management Institute, vol. 25(3), pages 632-655, June.
    3. repec:ibf:ijbfre:v:11:y:2017:i:2:p:1-22 is not listed on IDEAS
    4. Dr. Aniruddha DAS & Dr. Amith Vikram MEGARAVALLI & Dr. A. Sarath BABU, 2023. "What drives the oversubscription of IPO’s: evidence from Indian Stock Market," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(637), W), pages 47-62, Winter.
    5. Nurwahida Yaakub & Mohamed Sherif & Roszaini Haniffa, 2018. "The Post-issue Market Performance of Initial Public Offerings: Empirical Evidence from the Malaysian Stock Markets," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 17(3_suppl), pages 376-414, December.
    6. Yaakub, Nurwahida & Sherif, Mohamed, 2019. "Performance of initial public offerings (IPOs): the case of Shariah-compliant companies," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 27, pages 65-76.

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