Raising Equity Capitals

In many emerging countries, IPOs are not quickly listed after fixing the offer price. When an offer price is fixed well before listing, the initial underpricing will not necessarily reflect the intended discount on the offer price. A high discount may not be able to mitigate the error in offer pricing, because additional information revealing during the listing time lag affects IPO valuation before listing. However, high discount provides net return to investors after the cost of funds for issue subscriptions. Malaysian evidence shows that initial underpricing is significantly affected by IPO listing time lag, indicating that IPO valuation changes after the offer price is fixed when more information about its quality and market conditions is revealed.

Autorentext

Md Hamid Uddin earned PhD from Natinal University of Singapore. He is currently working as Associate Professor of Finance at University of Sharjah, United Arab Emirates. In addition, he is serving as Associate Editor of Studies in Economics and Finance and member of editorial review board of Banking and Finance Review.