Signalling role of underwriters and auditors on Initial Public Offerings’ (IPOs’) initial returns

Mohamed Afzal Khan, Mohamed Aslam Khan (2014) Signalling role of underwriters and auditors on Initial Public Offerings’ (IPOs’) initial returns. Masters thesis, Multimedia University.

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Abstract

This study examines a sample of 228 companies that went public in the Malaysian Stock Exchange known as Bursa Malaysia. This study intends to find whether the Reputations of Auditors’ and Underwriters’ have an effect on IPOs initial returns. Companies considering initiating public offerings (IPO) expect to raise funds and would like to maximize their initial return. The asymmetry of information between parties involved in initial public offerings often jeopardizes potential investors’ involvement. Besides Auditors’ and Underwriters’ reputation, other factors such as Market Condition, Firm Age and Firm Size also have a significant impact on IPOs’ initial returns. Therefore this study have included these factors as control variables. The findings reveal a number of significant relationships, some of which are opposite to the prediction. The results shows that the higher the reputation of the underwriter the lower the initial return. Whereas Auditors’ reputation is positively significant which states that the higher the reputation of Auditors’ the higher the initial return. The reason for this opposite direction is in line with the signaling hypothesis. This study can be a contribution to provide knowledge to Malaysian companies who are considering to initiate public offerings. Furthermore, this study is also useful for further research, and is expected to be additional material and references for subsequent studies of its kind.

Item Type: Thesis (Masters)
Additional Information: Call No.: HG4028.S7 M64 2014
Subjects: H Social Sciences > HG Finance
H Social Sciences > HG Finance > HG4001-4285 Finance management. Business finance.
Divisions: Faculty of Management (FOM) > MBA Programme
Depositing User: Ms Nurul Iqtiani Ahmad
Date Deposited: 11 Aug 2014 09:13
Last Modified: 30 Jun 2015 04:20
URI: http://shdl.mmu.edu.my/id/eprint/5664

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