UUM Electronic Theses and Dissertation
UUM ETD | Universiti Utara Malaysian Electronic Theses and Dissertation
FAQs | Feedback | Search Tips | Sitemap

Influence of institutional ownership and leverage towards the liquidity of IPOs

Muhammad Muslim, Samsudin (2017) Influence of institutional ownership and leverage towards the liquidity of IPOs. Masters thesis, Universiti Utara Malaysia.

[thumbnail of s820039_01.pdf]

Download (955kB) | Preview
[thumbnail of s820039_02.pdf]

Download (550kB) | Preview


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.

Item Type: Thesis (Masters)
Supervisor : Mohd Rashid, Rasidah
Item ID: 7578
Uncontrolled Keywords: Initial Public Offerings, Institutional ownership, Leverage, Adverse selection theory, Trading and signal theory
Subjects: H Social Sciences > HJ Public Finance
Divisions: Othman Yeop Abdullah Graduate School of Business
Date Deposited: 02 Jan 2020 00:58
Last Modified: 10 May 2021 07:01
Department: Othman Yeop Abdullah Graduate School of Business
Name: Mohd Rashid, Rasidah
URI: https://etd.uum.edu.my/id/eprint/7578

Actions (login required)

View Item
View Item