INTENDED USE OF IPO PROCEEDS, UNDERPRICING AND LONG-TERM MARKET PERFORMANCE OF STOCKS IN INDONESIA Harlina Meidiaswati (a), Nugroho Sasikirono (b), Dina Novita (c)
(a) Faculty of Economics, Kartini University.
(b) Faculty of Economics and Business, Universitas Airlangga
(c) Faculty of Economics, Kartini University.
Abstract
The aims of this study is to examine the effect of intended use of IPO proceeds on the market performance of stocks in the Indonesia Stock Exchange (IDX). The test is conducted by multiple linear regression to find out whether the information in the prospectus of stock offerings related to IPO proceeds utilization for: acquisition, group financing, long-term investment, debt repayment and working capital, affect both the initial and the long-term stock returns. The sample consist of 115 companies that made an initial public offerings in the Indonesia Stock Exchange during the period 2006-2013. The test results show that the disclosure of specific information about the use of funds for acquisitions negatively affects initial returns and long-term market performance. We also find that firm size is the main determinant of IPOs intended use of proceeds.
Keywords: intended use of IPO proceeds, underpricing, long-term market performance.
