IDEAS home Printed from https://ideas.repec.org/a/usm/journl/aamjaf00901_113-128.html
   My bibliography  Save this article

Flipping Activity and Subsequent Aftermarket Trading in Malaysian IPOs

Author

Listed:
  • Ruzita Abdul Rahim

    (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600, UKM Bangi, Selangor)

  • Ros Zam Zam Sapian

    (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600, UKM Bangi, Selangor)

  • Othman Yong

    (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600, UKM Bangi, Selangor)

  • Noor Azryani Auzairy

    (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600, UKM Bangi, Selangor)

Abstract

This paper examines the aftermarket trading volume following an initial public offering (IPO) in a sample of 243 IPOs listed on Bursa Malaysia between June 2003 and June 2008. Specifically, this study investigates the degree of flipping activity and its relationship with six ex-ante variables including IPO initial returns. Consistent with previous studies, the result of the cross-sectional multiple regression reveals a significantly strong positive relationship between initial returns and flipping activity for IPOs. Initial returns also seem to influence the subsequent week’s trading volume, but the influence is completely absorbed by flipping activity. The results also show that both institutional investor participation and offer size have significant influences on flipping activity. The results of this study imply that the Malaysian IPO market experiences active flipping activity that, in turn, has a significant role in predicting the subsequent trading activity.

Suggested Citation

  • Ruzita Abdul Rahim & Ros Zam Zam Sapian & Othman Yong & Noor Azryani Auzairy, 2013. "Flipping Activity and Subsequent Aftermarket Trading in Malaysian IPOs," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 9(1), pages 113-128.
    • Handle: RePEc:usm:journl:aamjaf00901_113-128
    as

    Download full text from publisher

    File URL: http://web.usm.my/journal/aamjaf/vol%209-1-2013/Art%206%20%28113-128%29.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ellis, Katrina, 2006. "Who trades IPOs? A close look at the first days of trading," Journal of Financial Economics, Elsevier, vol. 79(2), pages 339-363, February.
    2. Tay Seng Wu, 1993. "The Long Run Performance of Initial Public Offerings In Malaysia," Capital Markets Review, Malaysian Finance Association, vol. 1(1), pages 61-80.
    3. Othman Yong & Zaidi Isa, 2003. "Initial performance of new issues of shares in Malaysia," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 919-930.
    4. Bradley, Daniel J. & Jordan, Bradford D., 2002. "Partial Adjustment to Public Information and IPO Underpricing," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 37(4), pages 595-616, December.
    5. Low, Soo-Wah & Yong, Othman, 2011. "Explaining over-subscription in fixed-price IPOs -- Evidence from the Malaysian stock market," Emerging Markets Review, Elsevier, vol. 12(3), pages 205-216, September.
    6. Loughran, Tim & Ritter, Jay R. & Rydqvist, Kristian, 1995. "Initial public offerings: International insights," Pacific-Basin Finance Journal, Elsevier, vol. 3(1), pages 139-140, May.
    7. How, Janice & Jelic, Ranko & Saadouni, Brahim & Verhoeven, Peter, 2007. "Share allocations and performance of KLSE second board IPOs," Pacific-Basin Finance Journal, Elsevier, vol. 15(3), pages 292-314, June.
    8. Othman Yong, 2010. "Initial Premium, Flipping Activity and Opening-Day Price Spread of Malaysian IPOs," Capital Markets Review, Malaysian Finance Association, vol. 18(1&2), pages 45-61.
    9. Chahine, Salim, 2007. "Investor interest, trading volume, and the choice of IPO mechanism in France," International Review of Financial Analysis, Elsevier, vol. 16(2), pages 116-135.
    10. Schultz, Paul H. & Zaman, Mir A., 1994. "Aftermarket support and underpricing of initial public offerings," Journal of Financial Economics, Elsevier, vol. 35(2), pages 199-219, April.
    11. Ritter, Jay R., 2003. "Investment banking and securities issuance," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 5, pages 255-306, Elsevier.
    12. Laurie Krigman & Wayne H. Shaw & Kent L. Womack, 1999. "The Persistence of IPO Mispricing and the Predictive Power of Flipping," Journal of Finance, American Finance Association, vol. 54(3), pages 1015-1044, June.
    13. Bayley, Luke & Lee, Philip J. & Walter, Terry S., 2006. "IPO flipping in Australia: cross-sectional explanations," Pacific-Basin Finance Journal, Elsevier, vol. 14(4), pages 327-348, September.
    14. Nurwati A. Ahmad-Zaluki & Kevin Campbell & Alan Goodacre, 2007. "The Long Run Share Price Performance of Malaysian Initial Public Offerings (IPOs)," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(1-2), pages 78-110.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Che-Yahya, Norliza & Abdul-Rahim, Ruzita & Yong, Othman, 2014. "Influence of institutional investors' participation on flipping activity of Malaysian IPOs," Economic Systems, Elsevier, vol. 38(4), pages 470-486.
    2. Abdolhossein Zameni & Othman Yong, 2017. "Substantial Shareholders and Their Trading Behaviour around Lock-Up Expiry: Evidence from Emerging Markets," Capital Markets Review, Malaysian Finance Association, vol. 25(1), pages 1-18.
    3. Norliza Che Yahya & Ruzita Abdul Rahim, 2019. "Moderating Effect of Information Asymmetry on the Signalling Role of IPO Lockup Provision," Global Business Review, International Management Institute, vol. 20(4), pages 917-930, August.
    4. Che-Yahya, Norliza & Abdul-Rahim, Ruzita & Mohd Rashid, Rasidah, 2018. "The influence of “offer for sale” by existing shareholders on investors’ reaction in the IPO immediate aftermarket," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(4), pages 818-828, August.
    5. Norliza Che-Yahya & Ruzita Abdul-Rahim, 2015. "Role of Lockup Provision and Institutional Investors in Restricting IPO Flipping Activity: Is There A Moderating Effect of Investor Demand?," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 11(2), pages 1-28.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Che-Yahya, Norliza & Abdul-Rahim, Ruzita & Yong, Othman, 2014. "Influence of institutional investors' participation on flipping activity of Malaysian IPOs," Economic Systems, Elsevier, vol. 38(4), pages 470-486.
    2. Norliza Che-Yahya & Ruzita Abdul-Rahim, 2015. "Role of Lockup Provision and Institutional Investors in Restricting IPO Flipping Activity: Is There A Moderating Effect of Investor Demand?," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 11(2), pages 1-28.
    3. 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.
    4. repec:ibf:ijbfre:v:11:y:2017:i:2:p:1-22 is not listed on IDEAS
    5. Pegah Dehghani & Ros Zam Zam Sapian, 2014. "Sectoral herding behavior in the aftermarket of Malaysian IPOs," Venture Capital, Taylor & Francis Journals, vol. 16(3), pages 227-246, July.
    6. Kanagaretnam, Kiridaran & Lee, Jimmy & Lim, Chee Yeow & Lobo, Gerald J., 2022. "Trusting the stock market: Further evidence from IPOs around the world," Journal of Banking & Finance, Elsevier, vol. 142(C).
    7. Abdolhossein Zameni & Othman Yong, 2017. "Substantial Shareholders and Their Trading Behaviour around Lock-Up Expiry: Evidence from Emerging Markets," Capital Markets Review, Malaysian Finance Association, vol. 25(1), pages 1-18.
    8. Reber, Beat & Vencappa, Dev, 2016. "Deliberate premarket underpricing and aftermarket mispricing: New insights on IPO pricing," International Review of Financial Analysis, Elsevier, vol. 44(C), pages 18-33.
    9. Yong, Othman, 2007. "A review of IPO research in Asia: What's next?," Pacific-Basin Finance Journal, Elsevier, vol. 15(3), pages 253-275, June.
    10. Low, Soo-Wah & Yong, Othman, 2011. "Explaining over-subscription in fixed-price IPOs -- Evidence from the Malaysian stock market," Emerging Markets Review, Elsevier, vol. 12(3), pages 205-216, September.
    11. Oehler, Andreas & Rummer, Marco & Smith, Peter N., 2004. "IPO Pricing and the Relative Importance of Investor Sentiment: Evidence from Germany," Discussion Papers 26, University of Bamberg, Chair of Finance.
    12. Jay R. Ritter & Ivo Welch, 2002. "A Review of IPO Activity, Pricing, and Allocations," Journal of Finance, American Finance Association, vol. 57(4), pages 1795-1828, August.
    13. How, Janice & Jelic, Ranko & Saadouni, Brahim & Verhoeven, Peter, 2007. "Share allocations and performance of KLSE second board IPOs," Pacific-Basin Finance Journal, Elsevier, vol. 15(3), pages 292-314, June.
    14. Alqahtani, Faisal & Boulanouar, Zakaria, 2017. "Sharia compliance status & investor demand for IPOs: Evidence from Saudi Arabia," Pacific-Basin Finance Journal, Elsevier, vol. 46(PB), pages 258-268.
    15. C. Hopp & A. Dreher, 2013. "Do differences in institutional and legal environments explain cross-country variations in IPO underpricing?," Applied Economics, Taylor & Francis Journals, vol. 45(4), pages 435-454, February.
    16. Arnab Bhattacharya & Binay Bhushan Chakrabarti & Chinmoy Ghosh & Milena Petrova, 2020. "Innovations in financing: The impact of anchor investors in Indian IPOs," European Financial Management, European Financial Management Association, vol. 26(4), pages 1059-1106, September.
    17. Kooli, Maher & Zhou, Xiaozhou, 2020. "IPO flipping activity in China and its implications," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    18. Michel, Allen & Oded, Jacob & Shaked, Israel, 2014. "Ownership structure and performance: Evidence from the public float in IPOs," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 54-61.
    19. Charlie Charoenwong & David K. Ding & Tiong Yang Thong, 2016. "Decimalization, IPO aftermath, and liquidity," Review of Quantitative Finance and Accounting, Springer, vol. 47(4), pages 1303-1344, November.
    20. Ellis, Katrina, 2006. "Who trades IPOs? A close look at the first days of trading," Journal of Financial Economics, Elsevier, vol. 79(2), pages 339-363, February.
    21. 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.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:usm:journl:aamjaf00901_113-128. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journal Division, Penerbit Universiti Sains Malaysia (email available below). General contact details of provider: https://edirc.repec.org/data/aammmea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.