Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand

Purpose: This study aims to investigate the moderating role of investor demand on the relationship between the investors' divergence of beliefs and the first-day initial public offering (IPO) return. Design/methodology/approach: The study sample covers the period from 2010 to 2019 and consists...

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Tác giả chính:	Ali Albada
Đồng tác giả:	Soo-Wah Low
Định dạng:	Journal Article
Thông tin xuất bản:	Emerald Publishing Limited 2024
Chủ đề:	Initial public offerings (IPOs) Divergence of beliefs Investor demand Over-subscription ratio (OSR) Quasi-moderator
Truy cập trực tuyến:	https://digital.lib.ueh.edu.vn/handle/UEH/71014 https://doi.org/10.1108/JABES-12-2021-0206
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spelling	oai:localhost:UEH-710142024-05-09T07:43:51Z Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand Ali Albada Soo-Wah Low Moau Yong Toh Initial public offerings (IPOs) Divergence of beliefs Investor demand Over-subscription ratio (OSR) Quasi-moderator Purpose: This study aims to investigate the moderating role of investor demand on the relationship between the investors' divergence of beliefs and the first-day initial public offering (IPO) return. Design/methodology/approach: The study sample covers the period from 2010 to 2019 and consists of 117 IPOs that are priced using the fixed price and listed on the Malaysian stock exchange (Bursa Malaysia). This study employed both the ordinary least square (OLS) and the quantile regression (QR) methods. Findings: Investor demand, proxied by the over-subscription ratio (OSR), plays a moderating role in increasing the effect of investors' divergence of beliefs on initial return, and the moderation effects vary across the quantile of initial return. Pure moderation effects are observed at the bottom and top quantiles, suggesting that investor demand is necessary for divergence of beliefs to influence IPO initial return. However, at the middle quantile of initial return, investor demand is a quasi-moderator. That is, the OSR not only moderates the relationship between the divergence of beliefs and initial return but also has a positive effect on the initial return. Practical implications: Investors' excessive demand for an IPO issue exacerbates the IPO under-pricing issue induced by a divergence of beliefs amongst investors, thus rendering greater equity market inefficiency. Originality/value: To the authors' knowledge, this study is amongst the first to empirically investigate the moderating role of investor demand on the investors' divergence of beliefs and IPO initial return relationship. 2024-05-09T07:43:51Z 2024-05-09T07:43:51Z 2023 Journal Article 2515-964X https://digital.lib.ueh.edu.vn/handle/UEH/71014 https://doi.org/10.1108/JABES-12-2021-0206 Journal of Asian Business and Economic Studies JABES, Vol.30(4) none Portable Document Format (PDF) 296 308 Emerald Publishing Limited University of Economics Ho Chi Minh City
institution	Đại học Kinh tế Thành phố Hồ Chí Minh
collection	DSpaceUEH
topic	Initial public offerings (IPOs) Divergence of beliefs Investor demand Over-subscription ratio (OSR) Quasi-moderator
spellingShingle	Initial public offerings (IPOs) Divergence of beliefs Investor demand Over-subscription ratio (OSR) Quasi-moderator Ali Albada Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand
description	Purpose: This study aims to investigate the moderating role of investor demand on the relationship between the investors' divergence of beliefs and the first-day initial public offering (IPO) return. Design/methodology/approach: The study sample covers the period from 2010 to 2019 and consists of 117 IPOs that are priced using the fixed price and listed on the Malaysian stock exchange (Bursa Malaysia). This study employed both the ordinary least square (OLS) and the quantile regression (QR) methods. Findings: Investor demand, proxied by the over-subscription ratio (OSR), plays a moderating role in increasing the effect of investors' divergence of beliefs on initial return, and the moderation effects vary across the quantile of initial return. Pure moderation effects are observed at the bottom and top quantiles, suggesting that investor demand is necessary for divergence of beliefs to influence IPO initial return. However, at the middle quantile of initial return, investor demand is a quasi-moderator. That is, the OSR not only moderates the relationship between the divergence of beliefs and initial return but also has a positive effect on the initial return. Practical implications: Investors' excessive demand for an IPO issue exacerbates the IPO under-pricing issue induced by a divergence of beliefs amongst investors, thus rendering greater equity market inefficiency. Originality/value: To the authors' knowledge, this study is amongst the first to empirically investigate the moderating role of investor demand on the investors' divergence of beliefs and IPO initial return relationship.
author2	Soo-Wah Low
author_facet	Soo-Wah Low Ali Albada
format	Journal Article
author	Ali Albada
author_sort	Ali Albada
title	Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand
title_short	Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand
title_full	Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand
title_fullStr	Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand
title_full_unstemmed	Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand
title_sort	divergence of beliefs and ipo initial return: the quasi-moderating role of investor demand
publisher	Emerald Publishing Limited
publishDate	2024
url	https://digital.lib.ueh.edu.vn/handle/UEH/71014 https://doi.org/10.1108/JABES-12-2021-0206
work_keys_str_mv	AT alialbada divergenceofbeliefsandipoinitialreturnthequasimoderatingroleofinvestordemand
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Divergence of beliefs and IPO initial return: the quasi-moderating role of investor demand

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