Flipping activity in Malaysian IPO market: a new explanation from the winners' curse perspective
by Norliza Che-Yahya; Ruzita Abdul-Rahim; Rasidah Mohd-Rashid
International Journal of Accounting and Finance (IJAF), Vol. 9, No. 1, 2019

Abstract: This study examines the influence of winners' curse phenomenon on flipping activity through a winners' curse measurement proposed in Amihud et al. (2003). The study defines winners' curse using allocation rate (ALLOCj) which is as the natural log of the reciprocal of investor demand or oversubscription ratio. In a view, the presence of winners' curse in an IPO market leads to high flipping activities indicating that new IPO subscribers are not willing to retain the allocated IPOs for longer term. However, from another view where high ALLOCj could also reflect IPOs with low demand, the immediate trading activity by the new subscribers is not possible to be done. The latter view suggests that ALLOCj should produce low flipping activities. Using a sample of 381 IPOs issued in Bursa Malaysia from January 2000 to December 2013, the cross-sectional multiple regression analyses results report that ALLOCj relate significantly and negatively to flipping activity. The significant relationship supports the latter view that uninformed investors are more likely to win big IPOs which are not demanded by the informed investors. Therefore, the lower demanded IPOs produce low flipping activities.

Online publication date: Wed, 31-Jul-2019

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Accounting and Finance (IJAF):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com