Malaysian IPOs are, on average, substantially underpriced compared to underpricing in other
emerging and developed market. The findings of this study suggest that this average abnormal
return on the first trading day is 135 percent, after which the returns decline slightly in the first
week and gradually increase thereafter. A test on possible signalling attributes of new issues to
potential investors reveal that of all the suggested determinants, the ex-ante risk factor seems to
explain the level of underpricing
