The Examination of the Underpricing of Initial Public Offerings (IPOs) in Malaysia: 1990-1995

Abstract

The objective of this study is to determine the level of underpricing and the possible explanations for he underpricing phenomena by studying 112 companies listed on the KLSE Main Board for the period 1990-95. The results confirm that underpricing occurs in the Malaysian sock market, espe- cally in the industrial sector for the 1990-93 period and the construction sector for 1994-95. The insignificant price fluctuation after the first day of trading conforms to the efficient market hypoth- esis. Analysis on the proxies reveals that none of the observable measure for “ex-ante” uncertainty is significantly related to the level of underpricing in the Malaysian IPO market