THE INTENDED USE OF FUNDS AND IPOs MARKET PERFORMANCE IN INDONESIAN CAPITAL MARKET
:
https://doi.org/10.9744/jmk.21.2.120-129Keywords:
IPOs, intended use of proceeds, short-term market performance, long-term market performanceAbstract
Specific information on the IPO prospectus can affect the stock's market performance, both the initial returns and the long-term performance. The disclosure of the purpose of IPO proceeds to: acquisition, investment, group financing, debt repayment and working capital, as a specific form of information is indicated to affect both initial return and long-term stock returns. We conducted a test of 148 IPOs on the Indonesia Stock Exchange in the period 2006–2013. Data analysis was performed using OLS and probit regression. The test results show that there is a negative relationship between the intention of the acquisition and debt repayment with underpricing. The results also show that IPOs with the purpose of the debt repayment is positively related to the long-term market performance. The age of the company has a negative effect on IPOs with the purpose of acquisition and debt repayment, while the size of the company proxied by total assets is positively related to the intentions of group financing and debt repaymentReferences
Aggarwal, R., Leal, R., and Hernandez. L. (1993). The Aftermarket Performance of Initial Public Offerings in Latin America. Financial Management, 2(1), 42 -53.
Allen, F., and Faulhaber, G.R. (1989). Signaling By Underpricing In The IPO Market. Journal Of Financial Economics, 23(2), 303-323.
Autore, D.M., Bray, D.E. & Peterson, D.R. (2009). Intended use of proceeds and the long-run performance of seasoned equity issuers. Journal of Corporate Finance, 15, 358–367.
Balatbat, M.C., & Bertinshaw, S.T. (2008). Use of proceeds disclosures in IPO prospectuses, do issuers come clean? The Finsia Journal of Applied Finance, 2, 17-21.
Beatty, R.P., and Ritter, J.R. (1986). Investment banking, reputation, and the underpricing of initial public offerings. Journal of Financial Economics, 15, 213-232.
Ben Amor, S., & Kooli, M. (2016). Intended use of proceeds and post-IPO performance. The Quarterly Review of Economics and Finance, 65, 168-181.
Choe, H., Masulis, R.W., and Nanda, V. (1993). Common Stock Offerings Across The Business Cycle, Theory and Evidence. Journal Of Empirical Finance, 1, 3 – 31.
Clarkson, P. M. (1994). The underpricing of initial public offerings, ex ante uncertainty, and proxy selection. Accounting and Finance, 34, 67-78.
Core, J., (2001). A review of the empirical disclosure literature, Discussion. Journal of Accounting and Economics, 31, 441-456.
Datta, D.K. (1991). Organizational Fit and Acquisition Performance, Effects of Post-Acquisition Integration. Strategic Management Journal, 12(4), 281-297.
Davidson, K.M. (1988). The Acquisition Risk. Journal of Business Strategy, 9(3), 56-58.
DeAngelo, H., DeAngelo, L., and Stulz, R.M. (2010). Seasoned Equity Offerings, Market Timing, and The Corporate Lifecycle. Journal of Financial Economics, 95, 275–295
Gumanti, T.A., Nurhayati, and Maulidia, Y. (2015). Determinants of Underpricing in Indonesia Stock Market. Journal of Economics, Business, and Management 3(8), 802-806.
Healy, P., & Palepu, K. (2001). Information asymmetry, corporate disclosure, and the capital markets, A review of the empirical disclosure literature. Journal of Accounting and Economics 31, 405-440.
Hovakimian, A., & Hutton, I. (2010). Merger Motivated IPOs. Financial Management, 39(4), 1547–1573.
Ibbotson R., Sindelar, J., and Ritter, J.R. (1988). Initial Public Offerings. Journal Of Applied Corporate Finance, 1(2), 37–45.
Jeanneret, P. (2005). Use of proceeds and long-term performance of French SEO firms. European Financial Management, 11, 99–122.
Kim, J. B., Krinsky, I., & Lee, J. (1993). Motives for going public and underpricing, New findings from Korea. Journal of Business Finance and Accounting, 20,195-211.
Leone, A. J., Rock, S., & Willenborg, M. (2007). Disclosure of intended use of proceeds and underpricing in initial public offerings. Journal of Accounting Research, 45, 111–153.
Loughran, T., and Ritter, J.R. (2002). Why Don’t Issuers Get Upset About Leaving Money on The Table in IPOs? Review of Financial Studies, 15, 413-443
Ritter, J.R. (1991). The Long Run Performance of Initial Public Offerings. Journal of Finance, 46(1), 3-27.
Ritter, J.R. (1998). Initial Public Offerings. Contemporary Finance Digest, 2 (1), 5-30.
Ritter, J.R., and Welch, I. (2002). A review of IPO activity, pricing, and allocations. Journal of Finance, 57, 1795-1828.
Rock, K. (1986). Why new issues are underpriced. Journal of Financial Economics, 15, 187-212.
Verrechia, R. (2001). Essays on disclosure. Journal of Accounting and Economics, 32, 97-180.
Walker, M., and Yost, K. (2008). Seasoned equity offerings, what firms say, do, and how the market reacts. Journal of Corporate Finance, 14, 376–386.
Welch, I. (1989). Seasoned Offerings, Imitation Costs, and the Underpricing of Initial Public Offerings. Journal of Finance, 44, 421-449.
Welch, I. (1996). Equity Offering Following the IPO Theory and Evidence. Journal Of Corporate Finance, 2. 227-259.
Downloads
Published
How to Cite
Issue
Section
License
Authors who publish on this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).