Initial Returns of Shariah versus Non-Shariah IPOs: Are There Any Differences?

Ruzita Abdul-Rahim, Nor Azizan Che-Embi

Abstract


ABSTRACT

 

This study examines a sample of 384 initial public offerings (IPOs) issued and listed on Bursa Malaysia from January 1999 to December 2008. The objectives of this study are to examine the difference in initial returns of Shariah versus non-Shariah IPOs and the factors that explain the initial returns of these IPOs. A matched sample of Shariah IPOs, which contains the same number of IPOs and share similar characteristics with the non-Shariah IPOs, is created to ensure a more compatible comparison. The results of the difference tests consistently show that the initial returns of non-Shariah IPOs are not statistically different from those of all and matched sample of Shariah IPOs. The cross-sectional multiple regressions yield results demonstrating that Shariah and non-Shariah IPOs share only one common factor: allocation rate. Other than the sole common factor, the initial returns of non-Shariah IPOs are determined by external factors, namely the reputation of the underwriter and the condition of the market. On the contrary, the initial returns of the Shariah IPOs (all) depend on internal factors, namely the size of the offer; the age of the firm; and the ownership of the top five shareholders. As far as the result of the matched Shariah sample is concerned, none of the other variables are significant in explaining the initial returns.

 

Keywords: IPO initial return; Shariah IPOs; non-Shariah IPOs; allocation rate; growth motive

 

ABSTRAK

 

Kajian ini menguji satu sampel 384 saham tawaran awam awal (TAA) yang diterbitkan dan disenaraikan di Bursa Malaysia dari Januari 1999 hingga Disember 2008. Objektif kajian ini adalah untuk mengkaji pulangan awal saham TAA patuh Shariah berbanding yang tidak patuh Shariah dan juga faktor-faktor yang menjelaskan pulangan awal saham-saham TAA tersebut. Satu sampel padanan bagi saham TAA patuh Shariah yang mengandungi bilangan saham TAA yang sama dan mempunyai ciri-ciri yang sama dengan saham TAA tiak patuh Shariah dibentuk untuk memastikan perbandingan adalah lebih setara. Hasil ujian perbezaan secara konsisten menunjukkan pulangan awal saham tidak patuh Shariah secara statistik tidak berbeza dengan semua dan sampel padanan saham TAA patuh Shariah. Regresi berganda keratan rentas memperoleh hasil yang menunjukkan saham TAA patuh Shariah dan tidak patuh Shariah hanya mempunyai satu faktor lazim, iaitu kadar agihan. Selain faktor lazim tersebut, pulangan awal saham TAA tidak patuh Shariah ditentukan oleh faktor-faktor luaran iaitu reputasi penaja jamin dan keadaan pasaran. Sebaliknya, pulangan awal saham TAA patuh Shariah (semua) bergantung kepada faktor-faktor dalaman iaitu saiz tawaran, umur syarikat, dan pemilikan lima pemegang saham terbesar. Manakala bagi sampel padanan saham TAA patuh Shariah pula, pulangan awalnya tidak dipengaruhi oleh mana-mana faktor tersebut.

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Kata kunci: Pulangan awal saham TAA; saham TAA patuh Shariah; saham TAA tidak patuh Shariah; kadar agihan; motif pertumbuhan


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