Initial performance of new issues of shares in Malaysia

This paper presents the levels of under-pricing for new issues in a developing country, Malaysia, over a more recent period, January 1990-December 1998, than reported in prior studies. Three types of new issues were examined, namely public issue, offer for sale and combination or hybrid of offer for sale and public issue. Comparisons of initial return between types of new issues and between different board of listing were made. The results of independent t -tests for difference in mean initial returns indicate that, in general, there are significant differences in mean initial returns between types of new issues and between boards of listing. The results of step-wise regression reveal that on average, only over-subscription ratio contributes significantly to the initial returns. However, caution should be taken when interpreting the models formed because the Durbin-Watson rest indicate that some models are not free from problem of auto-correlation of the residuals.