Initial public offerings in Singapore : the effect of media on underpricing.

• Main Authors: Ler, Shalynn Tze Min., Wong, Cho Kwan., Yap, Sompong Min Hua.
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2011
• Subjects: DRNTU::Business::Finance::Equity
• Online Access: http://hdl.handle.net/10356/44183
• Institution: Nanyang Technological University

In this study, we examine the effects of media coverage on investors’ impressions and how these factors affect the underpricing of Initial Public Offerings (IPOs) in the Singapore context. We focus on IPOs listed on the Singapore Exchange (SGX) over a time period from year 1994 to 2003 and retrieve articles published by The Business Times Singapore, The Wall Street Journal Asia and The Straits Times (Singapore). The scope of this study covers how volume of media-provided information as well as the positivity or negativity (tenor) of the reported information affect investors’ impressions of these newly listed companies, and whether these impressions will affect the extent of underpricing in IPOs. Apart from media coverage, this research paper also attempts to determine if government holdings in firms affect the impact of media coverage on underpricing. Our results show that an increase in the volume of media information about a firm prior to its IPO listing decreases the level of underpricing and the effect becomes stronger closer to the first day of trading. Similarly, positive media coverage of a firm’s IPO would also lead to a decrease in underpricing and the effect becomes stronger closer to the first day of trading. In addition, government holdings in firms strengthen the negative relationship between tenor of media coverage and underpricing.