Factors Affecting Flipping Activities of Initial Public Offerings in Malaysia Post COVID-19
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Abstract
This study examines the determinants of Initial Public Offering (IPO) flipping activity in Malaysia during the post-COVID-19 recovery period (2020–2024). Analysing a sample of 123 IPOs listed on Bursa Malaysia, the research investigates the influence of ex-ante variables, including oversubscription ratio (OSR), offer price, offer size and initial returns. Robustness checks were conducted using 1-day, 3-day and 5-day flipping metrics, while controlling for firm size and age. The findings reveal a mean flipping ratio of 99.75%, a significant escalation compared to pre-pandemic benchmarks. Regression results consistently show that only IPO offer size and listing board type significantly impact flipping activity; specifically, smaller offerings and ACE Market listings experience substantially higher speculative trading. Interestingly, OSR and initial returns, traditionally viewed as proxies for demand and sentiment, exhibit no significant effect in the post-pandemic landscape. These results suggest a decoupling of traditional demand signals from flipping behaviour, indicating that post-pandemic IPO dynamics are driven more by structural factors than investor demand. These findings offer critical policy implications, suggesting that regulators should enhance oversight of the ACE Market to mitigate excessive speculative volatility. In general, the results highlight the need for refined share allocation policies and stricter monitoring of smaller-sized offerings to ensure long-term market stability and protect retail participants from the risks associated with high-intensity flipping in the ‘new normal’ of Malaysian capital markets.
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