Winner’s Curse and Bandwagon Effect in Malaysian IPOs: Evidence from 2001-2009
Sumpahan Pemenang dan Kesan Ikut Serta dalam TAP Malaysia: Bukti dari 2001-2009

Graduate School of Business
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, Malaysia

othmanyo@ukm.my

Abstract

This paper examines the winner’s curse hypothesis and the bandwagon effect in initial public offerings (IPOs), using Malaysian IPO data from January 2001 to December 2009. The average initial return (offer-to-close) for the 160 Malaysian private placement IPOs is 18.51 percent as opposed to the average initial return (offer-to-close) of 28.84 percent for the 210 non-private placement IPOs, which gives support to the winner’s curse hypothesis, where uninformed investors (using non-private placement IPOs as the proxy) demand a higher initial return in the absence of informed investors (using private placement IPOs as the proxy). The study also finds that the presence of a large number of informed investors in an IPO exercise, as compared to uninformed investors, brings with it an increased interest, or the bandwagon effect, in that particular stock, which results in higher initial return.

Keywords

Citation

Yong, O. (2011). Winner’s Curse and Bandwagon Effect in Malaysian IPOs: Evidence from 2001-2009. Jurnal Pengurusan, 32, 21–26.

@article{yong2011winners,
  title={Winner’s Curse and Bandwagon Effect in Malaysian IPOs: Evidence from 2001-2009},
  author={Yong, Othman},
  journal={Jurnal Pengurusan},
 

volume={32},
  number={},
  pages={21—26},
  year={2011},
  doi={},
  publisher={Penerbit UKM},
}

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32 (2011) 21 – 26

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