Chui, Zi Ong and Mohd Rashid, Rasidah and Taufil Mohd, Kamarun Nisham (2020) Do institutional investors drive the IPO valuation? Borsa Istanbul Review, xxx (xxxx). pp. 1-15. ISSN 22148450

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Abstract

This study aimed to investigate the effect of institutional ownership on initial public offering (IPO) valuation and also to examine the indirect role played by the pricing mechanism on the relationship. Cross-sectional multiple regression was used to analyse the relationship between institutional ownership and IPO valuation based on the sample of 450 IPOs listed on Bursa Malaysia between January 2000 and December 2018. The results show that institutional ownership had a positive association with IPO valuation. The signalling role of institutional investors attempted to convey information on firms' qualities which in turn had approximately fair IPO valuations. Further, this study found that book-built IPOs with higher institutional ownership were priced more closely to the firms' intrinsic values. The results have implications for underwriters and issuers in signalling firms’ qualities through incorporating book-building in IPOs and allocating a higher number of shares to institutional investors.

Item Type:	Article
Uncontrolled Keywords:	Book-buildingFixed-priceInstitutional ownershipInitial public offerings Price multiples Valuation
Subjects:	H Social Sciences > HG Finance
Divisions:	School of Economics, Finance & Banking
Depositing User:	Mrs. Norazmilah Yaakub
Date Deposited:	09 Sep 2020 03:15
Last Modified:	09 Sep 2020 03:15
URI:	https://repo.uum.edu.my/id/eprint/27452

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