The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia

In IPO market, the theory of liquidity as proposed by Booth and Chua (1996) suggest that higher initial return drives the broadness of shareholder base and thus may enhance post-listing liquidity of an initial public offering (IPO) stocks. Based on that hypothesis, this paper examines the sample of...

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Main Authors:	Ramlee, Roslily, Ali, Ruhani
Format:	Conference or Workshop Item
Language:	English
Published:	2014
Subjects:	HG4001 Financial management. Business finance. Corporation finance.
Online Access:	http://irep.iium.edu.my/48331/ http://irep.iium.edu.my/48331/ http://irep.iium.edu.my/48331/1/Roslily_16th_Malaysian_Finance_Association_Conference_2014.pdf

id	iium-48331
recordtype	eprints
spelling	iium-483312016-04-15T02:41:45Z http://irep.iium.edu.my/48331/ The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia Ramlee, Roslily Ali, Ruhani HG4001 Financial management. Business finance. Corporation finance. In IPO market, the theory of liquidity as proposed by Booth and Chua (1996) suggest that higher initial return drives the broadness of shareholder base and thus may enhance post-listing liquidity of an initial public offering (IPO) stocks. Based on that hypothesis, this paper examines the sample of 299 Bursa Malaysia IPOs for years 1998-2008 and finds that market adjusted initial return has significant positive predictive power on broadness of initial shareholder base. Market adjusted initial return is positively correlated with the breadth of shareholders and negatively correlated with the proportion of five largest and non-block institutional shareholders. IPO companies with sizeable number of shareholders tend to have higher post-listing liquidity whereas the proportion of block-holders and five largest shareholders adversely affect the secondary market liquidity. These results provide evidence to Booth and Chua’s hypothesis. Initial return also has a direct positive effect on post-listing liquidity. The positive relationship between initial return and post-listing liquidity is stronger for IPO stock with substantial ownership by government. Concentrated ownership structure in IPO with government ownership has negative effect on their trading turnover but greater liquidity is achieved through lower transaction cost. 2014 Conference or Workshop Item NonPeerReviewed application/pdf en http://irep.iium.edu.my/48331/1/Roslily_16th_Malaysian_Finance_Association_Conference_2014.pdf Ramlee, Roslily and Ali, Ruhani (2014) The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia. In: 16th Malaysian Finance Association Conference 2014 (MFA2014), 4th-6th June 2014, Sasana Kijang Central Bank of Malaysia, Kuala Lumpur. (Unpublished) http://umconference.um.edu.my/MFA2014=a48564053b3c7b54800246348c7fa4a0
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG4001 Financial management. Business finance. Corporation finance.
spellingShingle	HG4001 Financial management. Business finance. Corporation finance. Ramlee, Roslily Ali, Ruhani The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia
description	In IPO market, the theory of liquidity as proposed by Booth and Chua (1996) suggest that higher initial return drives the broadness of shareholder base and thus may enhance post-listing liquidity of an initial public offering (IPO) stocks. Based on that hypothesis, this paper examines the sample of 299 Bursa Malaysia IPOs for years 1998-2008 and finds that market adjusted initial return has significant positive predictive power on broadness of initial shareholder base. Market adjusted initial return is positively correlated with the breadth of shareholders and negatively correlated with the proportion of five largest and non-block institutional shareholders. IPO companies with sizeable number of shareholders tend to have higher post-listing liquidity whereas the proportion of block-holders and five largest shareholders adversely affect the secondary market liquidity. These results provide evidence to Booth and Chua’s hypothesis. Initial return also has a direct positive effect on post-listing liquidity. The positive relationship between initial return and post-listing liquidity is stronger for IPO stock with substantial ownership by government. Concentrated ownership structure in IPO with government ownership has negative effect on their trading turnover but greater liquidity is achieved through lower transaction cost.
format	Conference or Workshop Item
author	Ramlee, Roslily Ali, Ruhani
author_facet	Ramlee, Roslily Ali, Ruhani
author_sort	Ramlee, Roslily
title	The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia
title_short	The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia
title_full	The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia
title_fullStr	The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia
title_full_unstemmed	The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia
title_sort	effect of ownership structure on initial return and post-listing liquidity: evidence from bursa malaysia
publishDate	2014
url	http://irep.iium.edu.my/48331/ http://irep.iium.edu.my/48331/ http://irep.iium.edu.my/48331/1/Roslily_16th_Malaysian_Finance_Association_Conference_2014.pdf
first_indexed	2023-09-18T21:08:35Z
last_indexed	2023-09-18T21:08:35Z
_version_	1777411099901034496

The effect of ownership structure on initial return and post-listing liquidity: evidence from Bursa Malaysia

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