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Vol. 15, Number 1, 2020

 
LEVERAGE AND IPO PRICING: EVIDENCE FROM MALAYSIA
1Chui Zi Ong
2Rasidah Mohd-Rashid
3Kamarun Nisham Taufil-Mohd
School of Economics, Finance and Banking, Universiti Utara Malaysia, Malaysia
1Corresponding author: cztracy.1012@gmail.com; 
2m.rasidah@uum.edu.my; 3kamarun@uum.edu.my
 
 
Abstract | Text
 
The pricing of IPOs is a challenging task among underwriters as they require resources from firms. Contrary to the non-financial information presented in a prospectus to set an offer rice, pre-IPO accounting information could arguably influence IPO offer price. This study aims to investigate the relationship between leverage and IPO offer price. A crosssectional Ordinary Least Square (OLS) regression was implemented to investigate the relationship between leverage and offer price based on a sample of 129 Malaysian IPOs issued between January 2009 and December 2018. As a result, it was proven that leverage was negatively related to offer prices. Accordingly, it was proposed in the findings that fit, which issued higher leverages prior to IPO listing, often posed high financial risks. Subsequently, underwriters and issuers set a lower price for IPOs to compensate for a higher degree of information asymmetry among retail investors. Among the implications of this study’s findings include investor concerns on accounting information, especially leverage upon determining IPO value and IPO investment.
 
Keywords: Fixed-price mechanism, initial public offerings, leverage, offer price, information asymmetry.
 

JEL Code: G10, G11, G13


 
THE IMPACT OF MANAGERIAL CHARACTERISTICS ON THE CAPITAL STRUCTURE OF MALAYSIAN MANUFACTURING SMES
1Kuah Yoke Chin
2Zuriawati Zakaria
3Choong Chee Keong
Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Malaysia
1Corresponding author: kuahyc@utar.edu.my;
2zuriawatiz@utar.edu.my; 3choongck@utar.edu.my

 

 
 
Abstract | Text
 
Access to capital is a critical factor in stimulating small business creation and growth especially in developing companies. The failure of small business entities in securing the needed capital would entail them remaining small and limit their ability to create goods, services, and innovations in the marketplace, including jobs. This study focuses on manufacturing SMEs by examining the influence of managerial characteristics (age, gender, work experience and level of education) on capital structure towards technology improvement. Based on a survey of 219 respondents, the results indicated that male managers, managers with a lot of work experience and educated managers preferred internal and external financing. Furthermore, internal and external financing also showed positive relationships to improve manufacturing technology performance. This study provides and adds new knowledge to corporate managers to serve as benchmarks in making decisions on company performance. It could also enhance company ability to deal with competitive environments.
 
Keywords: Managerial characteristics, manufacturing, SME, financing.
 
JEL Code: D24

 
DETERMINANTS OF BANK COST EFFICIENCY: EMPIRICAL EVIDENCE FROM BANGLADESH
1Israth Sultana
 
2Mohammad Morshedur Rahman
University of Chittagong, Chattogram, Bangladesh
 
1israthctg@gmail.com
2Corresponding author: mmrais@cu.ac.bd; 
 
 
Abstract | Text
 
Due to the trust of depositors, banks should be responsible for efficient utilization of resources to achieve cost efficiency (CE) which in turn contributes to raising income. Previous studies found that the average CE of banks in Bangladesh was around 80%. This study aims to find the determinants of CE in Bangladesh from a sample of 33 banks during a period from 2009 to 2016. Stochastic Frontier Approach (SFA) was used to measure CE in the first stage. In the second stage, different types of regression estimations were used like pooled ordinary least square, fixed effect or random effect panel regression, System-Dynamic Panel Data Estimation and Arellano-Bond Dynamic Panel Data Estimation for comparison. The results showed that Generalized Method of Moments (GMM) specifically the Arellano-Bond Dynamic Panel Data Estimation was best suited for problems of endogeneity, serial correlation, heteroskedasticity and cross sectional dependence in data The results revealed that regulatory capital, risk measured by non-performing loan ratio, liquidity measured by total loans to total deposits, and level of operating costs had a significant negative impact on CE. In contrast, lagged cost efficiency, profitability, years of operation, net interest income had a significant positive impact on CE. To attain competitive advantage by performing with higher CE, policymakers should focus on capital regulation measured by capital adequacy ratio, risk level, profit earning capacity, aggressiveness of banks, bank size, years of operation and level of operating costs.
 
Keywords: Cost efficiency, risk, capital regulation, banks, panel data.
 
JEL Code: C23, E22, G18, G21, G32, H21

 
COMPARISON OF THE PASS-THROUGH SPEED MODELS OF DIFFERENT MARKETS: AN EMPIRICAL STUDY OF THE MARKETS OF MAINLAND CHINA AND TAIWAN
1Chi Ming Ho
 
2Wu Yih Lin
Department of Finance, Southern Taiwan University of Science and Technology
 
1Corresponding author: z0q@stust.edu.tw; hcmccu@gmail.com
2MA380204@stust.edu.tw 
 
 
Abstract | Text
 
This paper adopted the Boone Indicator, developed by Boone et al. (2008) and Van Leuvensteijn et al. (2011; 2013), to investigate the influence of different pass-through spread models in the competition among banks in emerging markets. With the market share of banks as a dependent variable and marginal cost as an independent variable, this paper probed into the competition among banks regarding the loan market to determine whether competition on the loan interest rates of banks affected the pass-through of monetary policy-related interest rates. After analyzing approximately 5,657 entries of records of the banking industries in Taiwan and mainland China, this paper reached three significant conclusions: 1) the Boone Indicator Model pointed out that, competition in the banking market of mainland China was more intense than that of Taiwan; 2) empirical research based on the Interest Rate Spread Model indicated that the spread of mainland China was lower than that of Taiwan; 3) the Passthrough Speed Model implied that, the interest rate sensitivity of the market of mainland China was higher than that of the Taiwan market. The above results indicate that the influence of monetary policy pass-through on the interest rate of the market in mainland China is faster than in Taiwan.
 
Keywords: Bank competition, Boone Indicator, spread, pass-through speed Model, Error Correction Model.
 
JEL Code: G21, G28

 
BOARD SIZE DETERMINANTS: EVIDENCE FROM NIGERIA
1Bazeet Olayemi Badru
School of Economics, Finance and Banking, Universiti Utara Malaysia
 
2Nordiana Osagie Davies
Waziri Umaru Federal Polytechnic, Birnin Kebbi
 
3Rihanat Idowu Abdulkadir
Faculty of Management Sciences, University of Ilorin
 
1Corresponding author: badru@uum.edu.my; bazeetolayemi@gmail.com
2osagiedavies@gmail.com; 3riolaq29@yahoo.com
 
 
Abstract | Text
 
This paper seeks to investigate the determinants of board size for Nigerian companies. To accomplish the aim of the study, a panel data set of public listed companies in Nigeria from 2005 to 2015 was employed. The results showed that the most common board size of Nigerian companies ranged from four to 18 members. Specifically, the findings indicated that board size was a function of company and industry characteristics. A significant and positive association was found between company size and board size, while CEO ownership and ownership concentration were negative. The results lend support to theoretical arguments that a company’s board structure is determined by the scope of company operations and monitoring costs associated with the company. Since company-specific characteristics determine board size, the impact of board size on corporate outcomes may differ based on these characteristics. Therefore, it would be helpful if future studies could consider the interactive effect of company characteristics when investigating the impact of board size on corporate outcomes.
 
Keywords: Board size; corporate governance; CEO ownership; ownership concentration; Nigeria
 
JEL Code: G3; G34
 

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