UTILIZING LIMITED DATA AVAILABLE TO SUPPORT INVESTMENT DECISION (STUDY IN INDONESIA STOCK EXCHANGE 2014-2018)

• Main Author: Grimonia, Jesslyn
• Format: Theses
• Language: Indonesia
• Subjects: Karya Umum
• Online Access: https://digilib.itb.ac.id/gdl/view/49364
• Institution: Institut Teknologi Bandung

This research will provide additional knowledge for the investor who interests in Initial Public Offering (IPO) market to support their investment decision by maximize the used of the limited available information. As we know, there is higher uncertainty in the IPO, because the data available to be accessed by the time at IPO are limited. Thus, in this research will be tested the impact of some uncertainty factor from the limited data available through the underpricing and liquidity changes. Underpricing as the main empirical phenomenon in the IPO market can maximize the initial return for the investor. As for the liquidity changes as measure by the trading volume, it can give an insight for the investor that want to hold the stocks in some period of time. The research data will be gathered from the company that conducted IPO in Indonesia Stock Exchanges (“IDX”) from 2014-2018 and the sample will be determined by purposive sampling method. There are 16 uncertainty factors that can be collected from the available data and become the independent variables. These factors include age of the company, size of the company, financial conditions (financial strength, PER, PBV, ROA, and ROE), corporate governance (board size, board independence, ownership concentration, and institutional ownership), type of industry, gross proceeds from the IPO, underwriter reputation, auditor reputation, and uses of the funds. The multiple linear regression will be applied to test the relationship of the uncertainty factor with underpricing and liquidity changes. The result is all uncertainty factors can simultaneously explain the underpricing and liquidity changes. For the partial test, size has significant impact through the underpricing. While age, board size, board independence, gross proceeds, and auditor reputation have a significant negative impact with underpricing. For the liquidity changes equation, size, PBV, and ROA have positive significant impact. While, age, gross proceeds, and auditor reputation have a negative significant impact. Moreover, this research also will give brief condition regarding the price changes, since the price changes also relate with the trading volume changes. With descriptive analysis found that from the sample mostly the stocks have less trading volume and lower price one year after. In maximizing the initial return, the investor can consider the limited available data before the IPO. As stated before, there are some factors that can help to predict the degree of underpricing. These factors consist of size of the company, age of the company, board size, board independence, gross proceeds, and auditor reputation. If the investor want to hold the stocks in some period, investor also can consider some factors to minimize the liquidity changes risk, which are size of the company, PBV, ! i! ROA, age of the company, gross proceeds, and auditor reputation. But, as stated before, there is no certainty regarding the changes in price. Thus, it is better to maximize the initial return, then investor can oversee the shares performance in some period of time and hope that the more true valuation can be achieved, since there are more available data, before decided which share is worth to buy. For the company that interest to conduct and IPO, they can put themselves as investor point of view by this research, the company can assess and value themselves, then maximize the potentiality of the company to adjust with their potential investor expectations. Since, not only underpricing as the main IPO phenomenon that will be discussed, but also will be discussed regarding liquidity changes. This liquidity changes proxy needs one year trading data after IPO and the latest period that have one year trading data when conducting this research is 2018. Thus, this research have a limitation since only use sample from the company that conducted IPO in the Indonesia Stock Exchanges from 2014-2018. The next researcher can extend the period or use latest period for the sample. The next researcher also can explore more regarding the uncertainty proxy in the research. It was proven by the result of coefficient of determination (R) that still have some room for the next researcher to broader the scope.