Operating Performance of Initial Public Offerings in Malaysia

Abstract

Abstract : This is an empirical study on the operating performance of Malaysian firms after their initial public offerings (IPOs). The study attempts to determine whether there is any significant difference between pre- and post-IPO operating performance. In addition, this study also examines whether pre-IPO factors such as age of firm, size of firm, dilution of ownership, multi-nationality of firm and pre-IPO profitability level determine the firms post-IPO operating performance. Using 162 samples of Malaysian IPOs during 1996 to 2000, a significant difference was found between pre-and post-IPO operating performance when operating return on assets (ROA), total assets turnover (ATO) and return on sales (ROS) were used to measure operating performance. This study also found size of firm and pre-IPO profitability to have a significant relationship with post-IPO operating performance.