Published date: Nov 12 2018

Journal Title: KnE Social Sciences

Issue title: The 2018 International Conference of Organizational Innovation (ICOI-2018)

Pages:

DOI: 10.18502/kss.v3i10.3415

H Meidiaswatimeidiaswatiharlina@gmail.com

N Sasikirono

This study aims to identify signalling theory and market feedback theory as asymmetric information proxies in Indonesia’s capital market to analyse the relationship between IPO and FiSEO using OLS and quantile regressions approach. The authors conducted this study based on the idea that it is more meaningful and relevant to investigate the determinant of the speed of FiSEO at different distribution points rather than covering the overall distribution. OLS and quantile regression analysis was applied to 128 samples of IPO companies in IDX during the period 1990–2013. The results show that signalling theory can explain the speed of conducting FiSEO in the Indonesian Stock Exchange (IDX). Testing with quantile regression explains that under-pricing is only able to explain the implementation of FiSEO, which happened not long after the IPO time (that is up to a period of 3.26 years or Q50). Age as a life cycle proxy is also able to explain the speed of implementing FiSEO.

[1] Al-Shammari, H., O’Brien, A., Ross, W., et al. (2013). Firm internationalization and IPO firm performance: The moderating effects of firm ownership structure. International Journal of Commerce and Management, vol. 23, no. 3, pp. 242–261.


[2] Allen, F. and Faulhaber, G. R. (1989). Signaling by underpricing in the IPO market. Journal of Financial Economics, vol. 23, no. 2, pp. 303–323.


[3] Chang, S., Chen, S., and Yichen Liu, Y. (2004). Why firms use convertibles: A Fuerher test of the sequential-financing hypothesis. Journal of Banking & Finance, vol. 28, pp. 1163–1183.


[4] De Lorenzo, M. and Fabrizio, S. (2001). Asymetric information and the role of underwriter. The prospectus and the analyst in underpricing of IPO. The Italian Case. Social Science Research Network.


[5] Fernando, C. S., Gatchev, V. A., and Spindt, P. A. (2005). Wanna dance? How firms and underwriters choose each other. Journal of Finance, vol. 60, pp. 2437–2469.


[6] Gumanti and Alkaf. (2011). Underpricing Dalam Penawaran Saham Perdana Dan Penawaran Saham Susulan. Jurnal Akuntansi dan Keuangan Indonesia, vol. 8, no. 1, pp. 21–35.


[7] Hensler, D., Rutherford, R., and Springer, T. (1997). The survival of initial public offerings in the aftermarket. Journal of Financial Research, vol. 20, no. 1, pp. 93–110.


[8] Hertszel, M. G., Huson, M. R., and Parrino, R. (2012). Public market staging: The timing of capital infusions in newly public firms. Journal of Finance Economics, vol. 106, pp. 72–90.


[9] Hill, P., and Hillier, D. (2009). Market feedback, investment constraints, and managerial behavior. European Financial Management, vol. 15, no. 3, pp. 584–605.


[10] Ibbotson, R. G. (1975). Price performance of common stock new issues. Journal of Financial Economics, vol. 2, pp. 235–272.


[11] Jegadeesh, N. (1991). Seasonality in stock price mean reversion: Evidence from the US and UK. Journal of Finance, vol. 46, pp. 1427–1444.


[12] Jegadeesh, N., Weinstein, M., and Welch, I. (1993). An empirical investigation of IPO returns and subsequent equity offerings. Journal of Financial Economics, vol. 34, no. 2, pp. 153–175.


[13] Jenkinson, T. J. (1990). Initial public offerings in the United Kingdom, the United States, and Japan. Journal of the Japanese and International Economies, vol. 4, pp. 428–449.


[14] Jiang, Y., Stohs, M., and Xie, X. (2015). The early bird gets the worm? The stock returns and operating performance of quick SEOs. International Journal of Business, vol. 20, no. 1, pp. 1083–4346.


[15] Koenker, R. and Bassett, Jr., G. (1978). Regression quantiles. Econometrica, vol. 46, pp. 33–50.


[16] Koenker, R. and Hallock, K. F. (2001). Quantile regression. Journal of Economic Perspectives, vol. 15, no. 4, pp. 143–156.


[17] Koenker, R. (2005). Quantile Regression. New York, NY: Cambridge University Press.


[18] Lambert, R. A., Leuz, C., and Verrecchia, R. E. (2012). Information asymmetry, information precision, and the cost of capital. Review of Finance, vol. 16, no. 1, pp. 1–29.


[19] Levis, M. (1995). Seasoned equity offerings and the short-run and long-run performance of initial public offerings in the UK. European Financial Management, vol. 1, no. 2, pp. 125–146.


[20] Meidiaswati, H. (2017). Asymmetric Information at First Seasoned Equity Offering in the Indonesian Capital Market. Dissertation, Postgraduate Program, the Faculty of Economics and Business, Universitas Airlangga.


[21] Merton, R. C. (1987). A simple model of capital market equilibrium with incomplete information. The Journal of Finance, vol. 42, no. 3, pp. 483–510.


[22] Ritter, J. R. (1984a). The hot issue market of 1980. The Journal of Business, vol. 57, no. 2, pp. 215–240.


[23] . (1984b). Signaling and the valuation of unseasoned new issues: A comment. Journal of Finance, vol. 39, no. 4, pp. 1231–1237.


[24] Shultz, P. (1993). Unit initial public offerings. Journal of Financial Economics, vol. 34, no. 2, pp. 199–299.


[25] Slovin, M. B., Sushka, M. E., and Bendeck, Y. M. (1994). Seasoned common stock issuance following an IPO. Journal of Banking and Finance, vol. 18, pp. 207–226.


[26] Welch, I. (1989). Seasoned offerings, imitation costs, and the underpricing of initial public offerings. Journal of Finance, vol. 44, pp. 421–449.


[27] . (1996). Equity offering following the IPO theory and evidence. Journal of Corporate Finance, vol. 2, pp. 227–259.