Long term performance of Islamic share price for Initial Public Offerings (IPOs) in Malaysia: evidence from Sharia-compliant companies listed on the Malaysian stock exchange (2006-2010)

• Main Authors: Abu Bakar, Nashirah, Rosbi, Sofian
• Format: Article
• Language: English
• Published: 2016
• Subjects: HG Finance
• Online Access: http://repo.uum.edu.my/26300/1/IJMSBA%202%201%202016%2055%2066.pdf; http://repo.uum.edu.my/26300/; http://doi.org/10.18775/ijmsba.1849-5664-5419.2014.26.1005
• Institution: Universiti Utara Malaysia

The objective of this study is to investigate the long-term (one to three year) performance of initial public offerings (IPOs) for sharia-compliant companies listed on the Malaysian Stock Exchange (MSE) for the period from 2006 till 2010. This study examines why some IPOs companies have a positive, and some IPOs companies have a negative long-term cumulative abnormal return (CAR). KLCI index is used as a benchmark for measuring long-term performance of IPOs for sharia-compliant companies. The empirical results show that the long-term performances for sharia-compliant companies are performed better (16.81 percent) than their benchmark for CAR equal-weight and the result for CAR value-weight show a slightly outperformed their benchmark (-0.07 percent). The results also indicate that CAR for equal-weight and value-weight of IPOs for sharia-compliant companies are significantly higher over performing by 14.58 percent and 4.11 percent respectively in the year 2006. While the results in 2007 (-1.34 percent) and 2008 (-3.43 percent) for value–weight are underperformed. This study also found that the underpricing, offer price, offer size, market type, trading/service industry, consumer product industry, property industry and REIT industry were statistically significant.