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The long run share price performance of Malaysian firms issuing equity private placements


Nordin, Norhafiza and Taufil Mohd, Kamarun Nisham (2011) The long run share price performance of Malaysian firms issuing equity private placements. Jurnal Pengurusan , 33 (2011). pp. 17-28. ISSN 0127-2713

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Abstract

The result of this study reveals an evidence of long run under performance of equity private placements in Malaysia using market index as a benchmark. When the firms are matched to firms with similar size and market-to-book, they neither over-perform nor under perform the matching firms over the three-year period under the equal-weighting scheme. However, a considerable difference exists between the CARs and BHARs under the value-weighting scheme. Unlike previous studies that find small firms under perform more than large firms, results of this study show the opposite. We find that large firms show greater degree of under performance than small firms. The result definitely does not conform to the widely acceptable idea that smaller firms are more likely to issue equity when they are overvalued due to higher degree of information asymmetry.Further results indicate that the under performance is driven by the outlier in the sample. When it is excluded from the sample, no significant result is detected for the two-year period. Nevertheless, it is interesting to note that for both CAR and BHAR, the under performance under equal-weighted scheme is worse when the returns are benchmarked against market index but in sharp contrast, the under performance under value-weighted scheme is worse when the returns are benchmarked against matching firms.

Item Type: Article
Subjects: H Social Sciences > HF Commerce
Divisions: School of Economics, Finance & Banking
Depositing User: Mrs. Norhafiza Nordin
Date Deposited: 25 Sep 2013 01:11
Last Modified: 24 Apr 2016 07:03
URI: http://repo.uum.edu.my/id/eprint/9099

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