ISSN: 2225-8329
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The Covid-19 consequences on stock market performance has important implications to global economic and businesses financial performance. It is crucial for companies to make wise economic and strategic decision amid the situation to diverse and expand their business for sustainability. Initial Public Offering (IPO) provides an avenue for the companies to raise capital for those purposes. This study analysed the performance of Initial IPO initial returns during the Movement Control Order (MCO) in Malaysia. We extended the study to explore the relationship between issuance proceeds intended use (investment and growth, working capital and debt repayment) and initial IPO performance. Data were collected from prospectus, firms’ websites, and DataStream Database involving 65 IPO companies since 2016. Using pairwise correlation and OLS regression, we found that despite less IPO being issued during the MCO, a significant number of the IPO issued reported positive initial return (under-pricing). The result also reported significant negative initial return for investment and growth as well as debt repayment intended use. Our findings contribute to the further discussion on corporate financing plans and investment strategies for investors. It also provides opportunity for further research to explore the post operating performance of IPO issued amidst economic crisis of Covid-19.
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In-Text Citation: (Adanan et al., 2021)
To Cite this Article: Adanan, S. A., Bustamam, K. S., Samad, K. A., Sani, A. A., Saidin, A., & Mamat, S. N. (2021). Does Intended Use Influence the Initial Returns of Initial Public Offering (IPO) Amidst Economic Crisis of Covid-19. International Journal of Academic Research in Accounting Finance and Management Sciences, 11(13), 629-643.
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