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Title:	Divergence of opinion and investors attention in Malaysian initial public offerings
Authors:	Cheedradevi Narayanasamy (ZP00807)
Supervisor:	Izani Ibrahim, Prof. Dr.
Keywords:	Investors Capital market Universiti Kebangsaan Malaysia -- Dissertations
Issue Date:	3-Mar-2017
Description:	Divergence of opinion (DOP) is a type of investor heterogeneity in which investors’ valuation of an asset diverges from each other in the capital market. It has been established that DOP is greater in initial public offerings (IPOs), more specifically in markets that offer fixed price IPOs that favours individual investors. With the increase of volume of trade in the Asian IPO market, particularly in Malaysia, individual investors may not reach the real value of their assets due to a greater degree of after-market DOP. Such a DOP may step up with different interpretations of information that is potentially spurred by limited attention paid by investors to the information. A significant number of past IPO studies have maintained that initial performance (PCC) is an important determinant of after-market DOP. However, the existing studies do not offer an ample lead to the connection between after-market DOP and investors’ attention. Scrutinizing on this aspect, this study investigates the moderating effect of attention on the relationship between initial performance (PCC) and after-market DOP of Malaysian fixed price IPOs. It also investigates the effect of the participation of the individual investors in IPOs on after-market DOP. The moderating effects are analyzed by employing hierarchical regression with a sample of 282 IPOs issued from 2004 to 2014. The regression results indicate that the moderation effect of attention significantly reduces disagreement of initial performance, resulting in less after-market DOP. Findings also show that individual investors’ participation is positively related to after-market DOP. Descriptive findings indicate that after-market DOP is greater despite higher attention and less stringent listing disclosure requirements in post-regulatory change. A similar finding is observed for smaller listing platforms with higher attention. However, regression results indicate that the moderating effect of attention significantly reduces disagreement irrespective of the regulatory change or listing platforms. While testing the same across hot and cold IPOs, this study finds that the after-market DOP is greater for hot IPOs irrespective of the level of attention, while after-market DOP is greater for cold IPOs that receive more attention. The findings suggest that participating individual investors do take advantage of the after-market DOP to dispose their undersubscribed shares early in the after-market. The findings also support the theory that after-market investors have difficulty absorbing information when they are distracted by other information or signals competing for their attention. This study also validates the contention by western scholars that greater after-market DOP leads to lower future returns of IPOs. Although previous studies report that underpriced IPOs perform better in the Malaysian market contrary to western markets, the findings in this study suggest that not all underpriced IPOs perform better. Only those IPOs with less disagreement to the IPO value and greater attention improve after-market investors’ wealth.,Certification of Master's/Doctoral Thesis" is not available
Pages:	272
Publisher:	UKM, Bangi
Appears in Collections:	Graduate School of Business / Pusat Pengajian Siswazah Perniagaan

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