Determinants of Amount of Capital Raised During IPO Sale

International Postgraduate Business Journal, Vol. 9(1), 28-45 (2017)

18 Pages Posted: 3 Oct 2017

See all articles by Bazeet Badru

Bazeet Badru

School of Economics, Finance and Banking. Universiti Utara Malaysia ; Universiti Utara Malaysia.

Nurwati A. Ahmad-Zaluki

Universiti Utara Malaysia - Othman Yeop Abdullah Graduate School of Business

Wan Nordin Wan-Hussin

Universiti Utara Malaysia - College of Business

Date Written: October 2, 2017

Abstract

There is no doubt that a resource crucial for the continued growth and survival of a company is capital. As a company’s investment scale increases, the need for additional capital becomes paramount. One way by which a company raises capital is through initial public offerings (IPOs). However, the amount of capital raised in the IPO market varies among companies. It is on this note that this study aimed to examine the factors that affect the amount of capital a company can raise during an IPO activity. To achieve the aim of this study, data was collected from pre-IPO prospectuses of the sampled IPOs. The study made particular reference to the signalling, upper echelons and resource dependence theories to identify the pre-IPO characteristics that could influence the amount of capital a company can raise in the IPO market. The results from this study provide valuable information that could help issuers to identify appropriate mechanisms that would signal the company’s quality and influence the value of the company. The results also provide hints to prospective investors on the managerial characteristics and company-specific characteristics to be considered when making investment decisions. The implication is that IPO issuers should pay attention to such criteria when making IPO decisions in order to maximize the value from the offerings. The results would also be important to several interested groups when a company undertakes an IPO decision.

Suggested Citation

Badru, Bazeet and Ahmad-Zaluki, Nurwati A. and Wan-Hussin, Wan Nordin, Determinants of Amount of Capital Raised During IPO Sale (October 2, 2017). International Postgraduate Business Journal, Vol. 9(1), 28-45 (2017), Available at SSRN: https://ssrn.com/abstract=3046541

Bazeet Badru (Contact Author)

School of Economics, Finance and Banking. Universiti Utara Malaysia ( email )

Universiti Utara Malaysia
Sintok, Kedah 06010
Malaysia
+60147265986 (Phone)

Universiti Utara Malaysia. ( email )

Sintok, Sintok 06010
Malaysia
+60147265986 (Phone)

Nurwati A. Ahmad-Zaluki

Universiti Utara Malaysia - Othman Yeop Abdullah Graduate School of Business ( email )

Universiti Utara Malaysia
Sintok, Kedah 06010
Malaysia

Wan Nordin Wan-Hussin

Universiti Utara Malaysia - College of Business ( email )

Sintok, Kedah Darul Aman 06010
Malaysia
+604-7003939 (Phone)
+604-7005762 (Fax)

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