Determinants of Underpricing in Islamic and Non-Islamic Shares on IPO
This study aims at investigating the factors affecting the share’s underpricing in service companies of the Initial Public Offering (IPO) on the Indonesia Stock Exchange (IDX) covering the period from 2011 to 2017. Compared to the precedent studies, this study provides an empirical comparison between Islamic and non-Islamic shares on 22 underpricing stock samples from 44 IPOs in Islamic service shares and 21 underpricing samples from 32 IPOs in non-Islamic service shares. This study adopts a multiple linear regression analysis and an independent sample t-test method. It is revealed that the underwriter's reputation and auditor's reputation have a significant effect on the underpricing of IPO on IDX, both in Islamic and non-Islamic service companies. The result of independent samples t-test indicates that Islamic service shares companies have better financial performance compared to non-Islamic service shares companies. Predicated upon the results, this study implicatively insinuates that companies based on Shariah compliance could anticipate the underpricing level more expeditiously since the Shariah principles are in line with the decreasing level of underpricing.
Albada, A., Yong, O., & Low, S. W. (2019). Relationship between prestige signals and over-subscription ratio: Evidence from Malaysian initial public offerings. International Journal of Managerial Finance, 15(4), 564–579. https://doi.org/10.1108 /IJMF-02-2018-0067
Arora, N., & Singh, B. (2019). Impact of Auditor and Underwriter Reputation on Underpricing of SME IPOs in India. Management and Labour Studies, 44(2), 193–208. https://doi.org/10.1177 /0258042x19829285
Authority Financial Service Report. (2017). Saham Syariah. https://www.ojk.go.id/id/kanal/syariah/data-dan-statistik/saham-syariah/default.aspx
Bakar, N. B. A., & Rosbi, S. (2017). Impact of the corporate structure and sharia-compliant status to average degree of ipo underpricing in Malaysia market. Advanced Science Letters, 23(9), 8758–8761. https://doi.org/10.1166/asl.2017.9965
Bakar, N. B. A., & Uzaki, K. (2013). An Empirical Study of Initial Public Offerings Underpricing for Shariah -Compliant Companies : The case of Malaysian Market. International Journal of Economics , Business and Finance, 1(9), 262–274.
Bakers, R. J., McDonald, B., & Miller, R. E. (1988). Underpricing of New Issues and the Choice of Auditor as a Signal of Investment Banker Reputation. Accounting Review, 63(4), 605. https://doi.org/10.2307/247902
Bank Indonesia. (2018). Monetary Policy Report Quarter I 2018. https://www.bi.go.id/id/publikasi/kebijakanmoneter/tinjauan/Default.aspx
Beatty, R.P., & Ritter, J. R. (1986). Investment Banking, Reputation, and The Underpricing of Initial Public Offerings. Financial Economics, 15(1), 213–232.
Beatty, Randolph P. (1989). Auditor Reputation and the Pricing of Initial Public Offerings. Accounting Review, 64(4), 693. https://doi.org/10.1002/hec.1807
Boulanouar, Z., & Alqahtani, F. (2016). IPO underpricing in the insurance industry and the effect of Sharia compliance. International Journal of Islamic and Middle Eastern Finance and Management, 9(3), 314–332. https://doi.org/10.1108/imefm-12-2014-0118
Budianto, K., Suhadak, Rahayu, S. M., & Dzulkirom, A. R. M. (2019). Effect of Accounting Information and Non-Accounting Information on Under-Pricing Ipo and Firm Value: a Study of Companies Listed on the Indonesia Stock Exchange During Period of 2008-2014. Russian Journal of Agricultural and Socio-Economic Sciences, 89(5), 69–75. https://doi.org/10.18551 /rjoas.2019-05.09
Carter, R., & Manaster, S. (1990). American Finance Association Initial Public Offerings and Underwriter Reputation Author ( s ): Richard Carter and Steven Manaster Source: The Journal of Finance , Vol . 45 , No . 4 ( Sep ., 1990 ), pp . 1045-1067 Published by : Wiley for the American Fin. 45(4), 1045–1067.
Chen, C., Shi, H., & Xu, H. (2013). Underwriter reputation, issuer ownership, and Pre-IPO earnings management: Evidence from China. Financial Management, 42(3), 647–677. https://doi.org /10.1111/fima.12006
Daljono. (2000). Analisis Faktor-Faktor yang Mempengaruhi Initial Return Saham yang Listing di BEJ tahun 1990-1997. SNA, 3.
Du, X., Li, X., Liu, X., & Lai, S. (2018). Underwriter–auditor relationship and pre-IPO earnings management: Evidence from China. Journal of Business Ethics, 152(2), 365–392. https://doi.org/10.1007/s10551-016-3278-4
Gao, S., Brockman, P., Meng, Q., & Yan, X. (2020). Differences of opinion, institutional bids, and IPO underpricing. Journal of Corporate Finance, 60(January 2018), 1–19. https://doi.org /10.1016/j.jcorpfin.2019.101540
Gerald, B. (2018). A Brief Review of Independent, Dependent and One Sample t-test. International Journal of Applied Mathematics and Theoretical Physics, 4(2), 50. https://doi.org/10.11648 /j.ijamtp.20180402.13
Ghozali, I., & Mansur, M. al. (2002). Analisis Faktor-Faktor Yang Mempengaruhi Tingkat Underpricing di Bursa Efek Indonesia. Bsinis Dan Akuntansi, 4(1).
Gusni, Subing, H. J. T., & Lestari, W. (2019). Corporate governance mechanism, underwriter reputation and IPOs underpricing: Evidence from Indonesia capital market. International Journal of Innovation, Creativity and Change, 6(5), 45–58.
Hapsari, V. A. (2012). Analisis Faktor-faktor yang Mempengaruhi Underpricing Saham pada Penawaran Umum Perdana di BEI Periode 20082010. Diponegoro Journal of Management., 1(1), 1–9.
Hau, H., & Lai, S. (2013). Real effects of stock underpricing. Journal of Financial Economics, 108(2), 392–408. https://doi.org/10.1016 /j.jfineco.2012.11.001
IFN. (2018). Islamic Finance News Indonesia Report. https://redmoneyevents.com/main/framework/assets/2018/reports/indonesia.pdf
Indonesia Stock Exchange. (2020). Listing Activities. https://www.idx.co.id/en-us/listed-companies/listing-activities/
Irfani, A. (2014). A Study of Financial Performance and Stock Return in IPO Underpricing Phenomenon on the Indonesia Stock Exchange (IDX). Indonesian Capital Market Review, 4(2), 101–116. https://doi.org/10.21002/icmr.v4i2.3618
Islam, et al. (2010). An Empirical Investigation of the Underpricing of Initial Public Offerings in the Chittagong Stock Exchange. International Jurnal of Economic and Finance, 2(4).
Islam, M. A., Ali, R., & Ahmad, Z. (2010). An Empirical Investigation into the Underpricing of Initial Public Offerings in the Chittagong Stock Exchange. International Journal of Economics and Finance, 2(4). https://doi.org/10.5539/ijef.v2n4p36
Jaballah, J., Peillex, J., & Weill, L. (2018). Is Being Sharia compliant worth it? Economic Modelling, 72(April 2017), 353–362. https://doi.org/10.1016/j.econmod.2018.02.011
Kamaludin, K., & Zakaria, N. (2019). The short and long-run performance of Sharia-compliant initial public offerings (IPOs) in the emerging market: Evidence from the Saudi Arabia Share Market. Journal of Reviews on Global Economics, 8, 706–716. https://doi.org/10.6000/1929-7092.2019.08.61
Kim, N. Y. (2019). Do reputable underwriters affect the sustainability of newly listed firms? Evidence from South Korea. Sustainability (Switzerland), 11(9). https://doi.org/10.3390/su11092665
Kristiantari, I. D. (2013). “Analisis Faktor- Faktor Yang Mempengaruhi Underpricing Saham Pada Penawaran Saham Perdana di Bursa Efek Indonesia.” Ilmiah Akuntansi Dan Humanika, 2(2).
Lestari, A. H., Hidayat, R. H., & Sulasmiyati, S. (2015). Analisis Faktor-faktor yang Mempengaruhi Underpricing Saham Pada Penawaran Umun Perdana di BEI Periode 2012-2014 (Studi pada Perusahaan yang Melaksanakan IPO di Bursa Efek Indonesia Periode 2012-2014). Administrasi Bisnis, 25(1).
Li, X., Wang, S. S., & Wang, X. (2019). Trust and IPO underpricing. Journal of Corporate Finance, 56(February), 224–248. https://doi.org/10.1016/j.jcorpfin.2019.02.006
Lyandres, E., Fu, F., & Lic, E. X. N. (2018). Do underwriters compete in IPO pricing? Management Science, 64(2), 925–954. https://doi.org/10.1287/mnsc.2016.2587
Mayes, D., & Alqahtani, F. (2015). Underpricing of IPOs in Saudi Arabia and Sharia compliance. Journal of Islamic Accounting and Business Research, 6(2), 189–207. https://doi.org/10.1108 /JIABR-12-2013-0042
Miller, E. (1997). Risk, uncertainty, and divergence of opinion. The Journal of Finance, 32, 1151–1168.
Narayan, P. K., & Phan, D. H. B. (2019). A survey of Islamic banking and finance literature: Issues, challenges and future directions. Pacific Basin Finance Journal, 53, 484–496. https:// doi.org/10.1016/j.pacfin.2017.06.006
Nugroho, R., & Nanda, R. (2016). Analisis Investasi Atau Penanaman Modal Dalam Konsep Ekonomi Islam. Universitas Islam Indonesia Yogyakarta.
Nurwahida, Y. (2019). Performance of initial public offerings (IPOs): the case of Shariah-compliant companies. Islamic Economic Studies, 27(1), 65–76. https://doi.org/10.1108/IES-06-2019-0012
Rani, P., & Kaushik, K. P. (2015). Underpricing , Firm ’ s Accounting Information and Grading of IPOs : An Empirical Analysis of Indian Private Sector. The IUP Journal of Applied Finance, 21(1), 84–100.
Ritter, J. R. (2011). Equilibrium in the Initial Public Offering Market Equilibrium in the Initial Public Offering Market. Review Literature And Arts Of The Americas, 1–38.
Rodoni, A., Mulazid, A. S., & Febriyanti, R. (2018). Phenomena and determinants of underpricing, flipping activity and long term performance: An empirical investigation of sharia IPO in Indonesia. International Journal of Monetary Economics and Finance, 11(4), 394–410. https://doi.org/10.1504/ijmef.2019. 10015501
Rumokoy, L. J., Neupane, S., Chung, R. Y., & Vithanage, K. (2019). Underwriter network structure and political connections in the Chinese IPO market. Pacific Basin Finance Journal, 54, 199–214. https://doi.org/10.1016/j.pacfin.2017.10.005
Rust, I. C. (2015). Factors and characteristics impacting underpricing of Initial Public Offerings (IPOs) on the Johannesburg Securities Exchange (JSE) [University of the Free State]. https://pdfs.semanticscholar.org/2e73/d3912a2992c193767cca5c1d4e244e7cbfc7.pdf?_ga=2.173811299.1563647057.1583990045-876669980.1582098344
Ruzita Abdul-Rahim, & Nor Azizan Che-Embi. (2013). Initial Returns of Shariah versus Non-Shariah IPO s : Are There Any Differences ? Jurnal Pengurusan, 39(2013), 37–50.
Suyatmi, & Sujadi. (2006). Faktor-faktor yang Mempengaruhi Underpricing pada Penawaran Umum Perdana di Bursa Efek Jakarta. Jurnal Benefit, 10(1), 11–32.
Tajuddin, A. H., Mohd Rashid, R., Khaw, K. L. H., & Che Yahya, N. (2019). Shariah-compliant status and investors’ demand for IPOs: the effects of information asymmetry. International Journal of Islamic and Middle Eastern Finance and Management, 12(4), 489–508. https://doi.org/10.1108/IMEFM-01-2019-0026
Tessema, A. M., Garas, S., & Tee, K. (2017). The impact of Islamic accounting standards on information asymmetry: The case of Gulf Cooperation Council (GCC) member countries. International Journal of Islamic and Middle Eastern Finance and Management, 10(2), 170–185. https://doi.org/10.1108/IMEFM-09-2016-0129
Tomczyk, S. (1996). Auditor reputation and initial public offerings by foreign companies. Journal of International Accounting, Auditing and Taxation, 5(2), 249–262. https://doi.org/10.1016/S1061-9518(96)90008-7
Tutuncu, L. (2020). Valuation and Underpricing of Turkish Ipos. Journal of Business Economics and Management, 21(1), 157–179. https://doi.org/10.3846/jbem.2020.11927
Wang, X., Zhang, L., Chan, K. C., & He, J. (2019). Does underwriter rating matter? Evidence from seasoned equity offerings in an emerging market. International Review of Economics and Finance, 61(March 2018), 17–34. https://doi.org/10.1016/j.iref.2019. 01.002
Widarjo, W., Rahmawati, Bandi, & Widagdo, A. K. (2017). Underwriter reputation, intellectual capital disclosure, and underpricing. International Journal of Business and Society, 18(2), 227–244. https://doi.org/10.33736/ijbs.480.2017
World Bank. (2019). The World Bank in Indonesia. https://www.worldbank.org/en/country/indonesia
Xu, S., Gong, G., & Gong, X. (2017). Accruals quality, underwriter reputation, and corporate bond underpricing: Evidence from China. China Journal of Accounting Research, 10(4), 317–339. https://doi.org/10.1016/j.cjar.2017.04.001
Yadav, A., & Goel, S. (2019). Research on underpricing concept of IPO (Initial public offering) in indian stock market. International Journal of Innovative Technology and Exploring Engineering, 8(11 Special Issue), 179–183. https://doi.org/10.35940/ijitee. K1038.09811S19
Zhang, Q., & Zhang, X. (2017). Underwriter Reputation and Post-IPO Price Performance : New Evidence from IPO Fraud of Chinese Listed Firms [Central University of Finance and Economics,]. http://www.fmaconferences.org/Boston/Underwriter_Reputation_and_PostIPO_Price_Performance_Qiuyue_Xueyong.pdf
Article StatisticAbstract view : 75 times
PDF views : 23 times
How To Cite This :
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.