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Influence of institutional ownership and leverage towards the liquidity of IPOs

The aim of this study was to examine the influence of institutional ownership and leverage towards the aftermarket liquidity of 65 initial public offering (IPOs) that are listed on Bursa Malaysia, an emerging stock market in the South East Asia, from January 2011 to December 2015. This study begins...

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Main Author: Muhammad Muslim, Samsudin
Format: Thesis
Language:English
English
Published: 2017
Subjects:
HJ Public Finance
Online Access:http://etd.uum.edu.my/7578/
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spelling my.uum.etd.75782021-05-10T07:01:34Z http://etd.uum.edu.my/7578/ Influence of institutional ownership and leverage towards the liquidity of IPOs Muhammad Muslim, Samsudin HJ Public Finance The aim of this study was to examine the influence of institutional ownership and leverage towards the aftermarket liquidity of 65 initial public offering (IPOs) that are listed on Bursa Malaysia, an emerging stock market in the South East Asia, from January 2011 to December 2015. This study begins from January 2011 to avoid the effects of the Global financial crisis in 2008. The data collected using the prospectus of the companies. The hypothesized effects are on liquidity based on the trading and signal and adverse selection theories. Trading and signal theory posits that institutional ownership contributes to higher level of aftermarket liquidity while adverse selection is vice versa. Trading volume is being used as a proxy of the liquidity of the stocks. Cross-section regression method is conducted to investigate the effects of institutional ownership and leverage on the liquidity of newly listed shares. The result indicates relationship between private institutional ownership and the liquidity of IPOs is insignificant. However after interacts the institutional ownership and leverage using multiplication of the both independent variables using centering mean the result shows impact of institutional ownership on liquidity of IPOs is significantly negative. The negative relationship show trading based on private information will deteriorate information asymmetry, thus will increase the adverse selection costs and eventually will decrease stock market liquidity. For leverage the result is negatively significant associate with liquidity as firms with high leverage signaling negative for investors since if firms need to finance a new project then new external financing will be needed accordingly the agency cost also increase. The significance of the study is to help the firm and investors to strategize their investment strategy as liquidity is important aspects in investment. 2017 Thesis NonPeerReviewed text en /7578/1/s820039_01.pdf text en /7578/2/s820039_02.pdf Muhammad Muslim, Samsudin (2017) Influence of institutional ownership and leverage towards the liquidity of IPOs. Masters thesis, Universiti Utara Malaysia.
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Electronic Theses
url_provider http://etd.uum.edu.my/
language English
English
topic HJ Public Finance
spellingShingle HJ Public Finance
Muhammad Muslim, Samsudin
Influence of institutional ownership and leverage towards the liquidity of IPOs
description The aim of this study was to examine the influence of institutional ownership and leverage towards the aftermarket liquidity of 65 initial public offering (IPOs) that are listed on Bursa Malaysia, an emerging stock market in the South East Asia, from January 2011 to December 2015. This study begins from January 2011 to avoid the effects of the Global financial crisis in 2008. The data collected using the prospectus of the companies. The hypothesized effects are on liquidity based on the trading and signal and adverse selection theories. Trading and signal theory posits that institutional ownership contributes to higher level of aftermarket liquidity while adverse selection is vice versa. Trading volume is being used as a proxy of the liquidity of the stocks. Cross-section regression method is conducted to investigate the effects of institutional ownership and leverage on the liquidity of newly listed shares. The result indicates relationship between private institutional ownership and the liquidity of IPOs is insignificant. However after interacts the institutional ownership and leverage using multiplication of the both independent variables using centering mean the result shows impact of institutional ownership on liquidity of IPOs is significantly negative. The negative relationship show trading based on private information will deteriorate information asymmetry, thus will increase the adverse selection costs and eventually will decrease stock market liquidity. For leverage the result is negatively significant associate with liquidity as firms with high leverage signaling negative for investors since if firms need to finance a new project then new external financing will be needed accordingly the agency cost also increase. The significance of the study is to help the firm and investors to strategize their investment strategy as liquidity is important aspects in investment.
format Thesis
author Muhammad Muslim, Samsudin
author_facet Muhammad Muslim, Samsudin
author_sort Muhammad Muslim, Samsudin
title Influence of institutional ownership and leverage towards the liquidity of IPOs
title_short Influence of institutional ownership and leverage towards the liquidity of IPOs
title_full Influence of institutional ownership and leverage towards the liquidity of IPOs
title_fullStr Influence of institutional ownership and leverage towards the liquidity of IPOs
title_full_unstemmed Influence of institutional ownership and leverage towards the liquidity of IPOs
title_sort influence of institutional ownership and leverage towards the liquidity of ipos
publishDate 2017
url http://etd.uum.edu.my/7578/
_version_ 1701165231897575424
score 13.211869

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