Comparison of pre and post initial public offerings performance.

• Main Authors: Au, Kwai Hoy., Lee, Yah Li., Ng, Yew Cheng.
• Other Authors: Lee Lip Nyean
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Accounting
• Online Access: http://hdl.handle.net/10356/51516
• Institution: Nanyang Technological University

Investing in IPOs has provided great earning opportunities for investors. This might be the reason why almost all the research were done on the post-issue listing performance of IPOs using the stock price returns. This study attempts to assess and compare the pre- and post-listing performance of the selected 46 IPO firms and a group of 33 matched companies of the similar nature to the IPO firms. Four operating performance measures, namely: return on equity; operating return on assets; sales growth rates and profit growth rates were used in the performance evaluation. IPO firms have the best performance and outperform the matched companies in the year oflisting. However, there is a subsequent decline in their post- performance. This is due to the fact that entrepreneurs time their issues to coincide with periods of unusually good performance. In addition, firms with higher ownership retention after listing tend to perform better. On the other hand, no sufficient evidence existed to prove that (1) there is a significant relationship between the pre- (and post-) operating performance of firms and underpricing; (2) younger firms perform better than older firms; (3) companies listed on SESDAQ have poorer performance than those on Mainboard and (4) firms with high-ownership retention have better performance than those with low-ownership retention.