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Title:	Impact of lock-up provision, shareholder retention and potential of follow-on offerings on initial returns of Malaysian IPOs
Authors:	Rasidah binti Mohd Rashid (ZP00550)
Supervisor:	Ruzita Abdul Rahim, Prof. Dr.
Keywords:	Impact Lock-up provision Shareholder retention Follow-on offerings Initial returns Malaysian IPOs Going public (Securities) -- Malaysia
Issue Date:	29-Apr-2014
Description:	The objective of this thesis is to examine the role of lock-up provision, shareholder retention and potential of follow-on offerings (PFO) in determining the initial performance of initial public offerings (IPO) in Malaysia. Generally, empirical studies on these relationships are still limited while very few evidence particularly on lock-up provision has been established from Malaysia. Indeed, no attempt has been made on lock-up provision since the imposition of the lock-up provision on IPO issuers on May 3, 1999. Based on signaling theory, this thesis hypothesizes that since more stringent terms are imposed on riskier firms, lock-up provision is expected to influence IPO initial return positively. Meanwhile, shareholder retention is considered signaling the issuers’ quality such that it is expected to negatively influence IPO initial returns. The present study also examines the effect of PFO on initial return by proposing a conjecture that issuers use the IPOs to "leave a good taste" to attract investors to subscribe to their stocks in follow-on offerings. In examining the influences of the three main factors (i.e., lock-up provision, shareholder retention and PFO) on IPO initial returns, this thesis also considers the potential impacts of other variables (IPO demand, supply and risk, institutional investor's involvement, and pre-IPO and during IPO market condition) in which their relationships with IPO initial returns have been proven in previous studies. Using a sample of 373 IPOs that are listed on Bursa Malaysia from January 2000 to December 2012, this thesis examines the research hypotheses by employing cross-sectional multiple regressions. Results of the study show that lock-up period, voluntary lock-up ratio, and PFO are significant in explaining IPO initial returns. Consistent with the signaling and information asymmetry hypotheses, the positive relationships between the lock-up period and voluntary lock-up ratio, and initial returns support the prediction that IPOs with higher uncertainty (risk) need to reward the investors with higher initial returns. The positive effects could also indicate the effectiveness of lock-up provision as a mechanism to protect the interests of minority shareholders by ensuring the original major shareholders continue to be committed towards their firm’s performance after the IPO issuance. This argument, which is more inclined toward a quality signaling, is also prevalent since longer lock-up period and higher voluntary lock-up ratio IPO firms are associated with IPOs with higher shareholder retention and demand, and lower risk. The negative effect of PFO on initial returns on the contrary is more consistent with the signaling theory in the capital structure literature. That is, a higher PFO, which suggests a greater possibility for the IPO issuers to come back with the follow-on offerings, seems to signal lack of confidence among shareholders in their company’s prospects and concerns over dilution of ownership. Findings of the study also indicate that the moderating effect of investor demand and information asymmetry does not have a significant influence on the relationships between the main factors and initial returns.,Ph.D
Pages:	236
Call Number:	HG4028.S7.R346 2014
Publisher:	UKM, Bangi
Appears in Collections:	Graduate School of Business / Pusat Pengajian Siswazah Perniagaan

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