Board of director attributes, audit committee characteristics and institutional ownership on Malaysian IPOS liquidity

• Main Author: Al-Masawa, Amal Mohammed Hasan
• Format: Thesis
• Language: English; English
• Published: 2020
• Subjects: HF5667 Professional Ethics. Auditors.; HG Finance
• Online Access: https://etd.uum.edu.my/10320/1/permission%20to%20deposit-grant%20the%20permission-900299.pdf; https://etd.uum.edu.my/10320/2/s900299_01.pdf; https://etd.uum.edu.my/10320/
• Institution: Universiti Utara Malaysia

Over the past two decades, Malaysia has had a very low turnover ratio, and this is an issue affecting the liquidity of Initial Public Offering (IPO) firms. In recent years, IPO firms are inclined to improve their corporate governance mechanisms to enhance their financial reporting quality. Therefore, this study examines to what extent the internal monitoring mechanisms, namely board of directors, audit committee, and institutional ownership affect the liquidity of IPOs. In addition, this study examines the influence of the Malaysian Code on Corporate Governance 2012 (MCCG 2012) as a moderating factor between audit committee and the liquidity of IPOs. This study employs the cross-sectional regression analysis for 305 IPOs listed on the Bursa Malaysia between 2002 and 2017. The findings of this study reveal that among the board and audit committee characteristics, board size and independence, audit committee size and independence are positive and significantly related to the liquidity of IPOs. The findings also indicate a significant positive relationship between institutional ownership and the liquidity of IPOs. MCCG 2012 is significantly moderate the relationship between audit committee characteristics and liquidity of IPOs. Based on the findings, this study contributes to a better understanding of the role of corporate governance mechanisms and the liquidity of IPOs. The results suggest that IPO firms should improve the effectiveness of the board of directors and audit committees to enhance their financial reporting quality and increase transparency which in turn reduces information asymmetry and positively influences their liquidity. The findings will benefit investors, regulators and market participants by giving them a clear picture of the characteristics of the board of directors and the audit committees that could improve financial reporting quality and help them in their investment decisions because their wealth depends on the accuracy of the information disclosed in the financial reports.