Disclosure of Intended Use of IPO Proceeds: Evidence from Malaysia

4th International Conference on Accounting, Business and Economics (ICABEC 2016)

10 Pages Posted: 1 Aug 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: July 27, 2017

Abstract

The primary aim of the study is to investigate what Malaysian IPO issuers indicate as the intended use of IPO proceeds. This is achieved through a manual content analysis of 161 IPO prospectuses during the period of 2005-2013. The results indicate that two major intended uses of IPO proceeds are for capital expenditure and working capital. However, we are perturbed by the frequency of the sampled IPOs’ intention to use the IPO proceeds and the higher percentage of total proceeds used for working capital. This calls for serious regulatory policies that would provide issuers access to equity market and to use the IPO proceeds for growth opportunities. A takeaway from the study provides that intended use of IPO proceeds may provide useful information to potential investors to make informed decisions and for issuers to signal their quality.

Keywords: IPO proceeds, Growth opportunities, Debt repayment, Working capital, Malaysia

Suggested Citation

Badru, Bazeet and Ahmad-Zaluki, Nurwati A. and Wan-Hussin, Wan Nordin, Disclosure of Intended Use of IPO Proceeds: Evidence from Malaysia (July 27, 2017). 4th International Conference on Accounting, Business and Economics (ICABEC 2016), Available at SSRN: https://ssrn.com/abstract=3010033 or http://dx.doi.org/10.2139/ssrn.3010033

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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