A Test of Initial Public Offerings (IPOs) Underpricing Performance in Malaysian Stock Exchange (MSE)

The main purpose of this paper was to investigate the degrees of Initial Public Offerings (IPOs) underpricing in Malaysia market. Based on 476 IPOs data collected from 2000 until 2011 in Malaysian Stock Exchange (MSE), we calculated the degrees of IPOs underpricing and determinants factors of IPOs underpricing. The effect of determinants factors were examined in this study is issues price, offer size, companies age and types of industries into degrees of IPOs underpricing. 12 dummy variables were created in types of industries. The results from descriptive statistics analysis show that, total degrees of IPOs underpricing in Malaysian Stock Exchange was 35.87% with a standard deviation was 1.1032. Estimation based on multiple linear regression analysis indicates a difference result in issues price, offer size, companies age and types of industries into degrees of IPOs underpricing. Issues price and offer size was significance at 5% significance level. Companies’ age, REITs and Infrastructure Project Cos. was found to be significance at 10% level of significance. While, consumer product, construction, property, technology, trading/service, Special-Purpose Allocation Company (SPAC), finance, close-fund and plantation was founded to be insignificance (at 5% and 10% significance level). The R square was 80.7%. This result means the issues price, offer size, companies’ age and types of industries can explain 80.7% variations of degrees in IPOs underpricing issues in MSE. While, the F-Value is 137.905 was indicated that this hypothesis was statistically significant between dependent variable and independent variable.