Market performance on resale of treasury shares

The study examines the announcement effects on resale of treasury shares among publicly listed firms in Malaysia.All firms that resale their treasury shares between 2001 and 2012 are analyzed using standard event methodologies namely market adjusted return (MAR) and market model (MM).We find that resale firms experience significant positive 4% abnormal returns in the 5 days prior to the actual resale of treasury shares.However, there are no abnormal gains realized following the actual resale of treasury shares date, suggesting that the market is semi-strongly efficient where prices can fully reflect all publicly available information

Equity private placements: The Malaysian experience 1999 - 2007

This study offers evidence concerning the announcement effect of equity private placements by examining the stock market reaction to the announcements made by Malaysian firms for the period 1999 to 2007.This study is motivated by empirical findings that unlike public placements, private placements are associated with positive announcement effect.Two prominent hypotheses used to explain the positive market responses are information and monitoring hypotheses.However, inconsistent with previous studies, we find zero announcement effect for Malaysian market.The result suggests that equity private placement in Malaysia does not convey positive signal as it does in other countries

Does Growth Opportunity Matter in Explaining the Oversubscription Phenomena of Malaysian IPO?

AbstractThe oversubscription ratio of IPO prior to listing is an anomaly in countries that employed fixed price mechanism. According to the signaling theory argument, IPOs of good quality attract subscription from investors. An analysis was made to observe whether IPOs with growth opportunity (good quality) account for oversubscription. Using multivariate regression, it is found that there is a significant negative relationship between growth opportunity and oversubscription ratio. A significant negative coefficient of growth opportunity suggests that companies with high growth opportunity tend to have low risks and are not overly subscribed by investors as they provide low initial returns

Does market portfolio index really affect foreign exchange exposure? An empirical evidence from Malaysian non financial firms

Financial theory holds that fluctuations in exchange rate significantly influence open market firms by affecting their cash flows and firm value. Because of high market openness and fluctuations in Malaysian exchange rate, this study first investigates the extent to which 224 sampled firms of Malaysia face foreign exchange risk during the period of 2008 to 2014. It is found that 37% of the firms are exposed to (total) foreign exchange rate exposure during sample period. The dominance of Malaysian firms with positive β1 in each year implies that most of the Malaysian firms in the sample are net-exporters. To test the sensitivity of market portfolio index in exposure model, the Malaysian market index, i.e., FBMEMAS, is added in the exposure model and foreign exchange exposure for Malaysian firms is re-estimated over the sample period. It is obvious from the results that the number of significant coefficients of market index remains surprisingly high throughout the sample period than that of tradeweighted Index (TWI). A 67% of total firms have significant relationship with market index over the sample period as compared to 9% of TWI which shows drastic decreased in foreign exchange exposure by 76%. These results confirm that sometimes market portfolio index as a whole become strongly correlated with exchange rate changes and, in result, it dramatically reduces foreign exchange exposure

Signaling and substitution hypotheses in Malaysian share repurchases

There is an increasing trend of firms undertaking share repurchases in Malaysia, yet limited studies on repurchase activities have been published. This study attempts to examine managerial motives for repurchase in Malaysia using signaling and substitution hypotheses.Unlike firms in western countries, firms in Malaysia are bound by strict rules and regulations before embarking on repurchases, thus it is argued that motives for share repurchases would be different from those of the developed markets.The results of this study are consistent with signaling hypothesis where Malaysian firms repurchase shares partly to signal undervaluation and better operating performance.They also buy back shares whenever there is an increase in cash flows.However, there is no evidence to support that these firms bought back shares to substitute dividend payments as documented by studies from western countries. In fact, repurchases are used to complement dividends.Further evidence shows that managerial ownership has significant influence on firms’ repurchase decisions

Ownership Structure And Bank Performance During Economic Crisis In Indonesia

Indonesia had the economic and political crisis in mid-1997 through 1999. This crisis resulted in bank performance down even a loss. The banks are also experiencing financial hardship issues, loan loss and the threat bangkrup. A unique characteristic of Indonesian banking system is the existence of regional development banks (Bank Pembangunan Daerah), which is owned by local governments. This study examines the performance of this type of banks compared to private between regional development banks and federal government banks. Also this study examines the factors influence of bank performance. Measurement bank performance are Return On Assets (ROA) and Return On Equity (ROE). The sample of this study consists of 15 community development banks, 56 private banks, and 3 central government banks from 1997 to 1999. Using panel data methodologies, we find that community development banks and federal government banks perform at least as good as the private banks. Dummy equity, economic growth, equity ratio, loan ratio, cost ratio and total assets influence bank performance during economic crisis in Indonesia

Determinants of hedging: a review of theoretical studies

Hedging instruments are deemed as value enhancing tool for both financial and non financial firms. The aim of this study is to highlight those theoretical studies which are written in context of hedging determinants. Theoretical studies argued that in a world with no taxes, no transaction costs, and with fixed investment policies, hedging with derivatives is irrelevant to firm value. However, some studies suggests that derivative instruments can increase firm value when the premises of a perfect market have been relaxed, since they can eliminate corporate tax liabilities, financial distress costs, dependence on costly external financing, and agency costs

Future earnings growth and dividend payout: Evidence from Malaysia

This study investigates the effect of dividend payout on firms’ future earnings growth (FEG) in Malaysia. We use panel data analysis methodology to determine the effect of dividend payout and other control variables on FEG in 1, 2, 3, 4, and 5 years. Our results show that firm size and payout ratio had significant positive relationship on four out of five dynamic models tested. The remaining factors except of debt ratio are significant at least four out of the five years used in dynamic models in this study. We find evidence that Malaysian firms show mean reversion pattern in their earnings; smaller firms would enjoy greater future earnings growth; increased monitoring from creditors leads to better earnings performance; firms with better investment prospect have greater future growth in earnings; and higher investment in assets leads to higher future earnings growth. The findings show that in Malaysia, managers use dividend as a tool to signal their positive private information about the firms’ future prospect

The influence of firm size on IPO oversubscription: evidence from Bursa Malaysia

The purpose of this paper is to examine the influence of firm size on oversubscription of initial public offerings (IPOs) listed on the Bursa Malaysia from the period of 2005 to 2015. The presence of firm size in influencing oversubscription further enables us to test the information asymmetry argued by Beatty and Ritter (1986). Data of 254 IPOs over a period of 11 years were obtained from the websites of Bursa Malaysia. Multivariate regression analysis was carried out to test for the relationship between oversubscription and independent variables. The finding of the study shows that firm size has a significant and negative influence on oversubscription. The result indicates that large firm which have a proven track records would have lower information asymmetry and do not need to under price their IPOs to attract investors and decrease the probability of oversubscription

Resale of treasury shares: Malaysia evidence

The first objective of the study examines the announcement effects on resale of treasury shares among public listed firms in Malaysia. All firms that resale their treasury shares between 2001 and 2012 are examined using standard event methodologies namely market adjusted return (MAR) and market model (MM).The finding reveals that resale firms experience significant positive 4% abnormal returns in 5 days prior to the actual resale of treasury shares. There is no abnormal gains realize following the actual resale of treasury shares date suggesting that market is semi-strongly efficient where prices can fully reflect all publicly available information.The second objective is to assess the relationships between three companies' financial characteristics and the magnitude of shares resale, which is the percentage of shares resale in the open market (PRESALE).Based on signaling theory, it is found that both prior returns and current EPS are positively and significantly affecting the percentage of treasury shares resold in the market while LAGEPS has a negative and significant relationship with PRESALE