Bazeet O. Badru Nurwati A. Ahmad Zaluki Wan Nordin Wan Hussin

Abstract

This study investigates the anticipated and the actual use of capitalraised from initial public offering (IPO) in Malaysia. The descriptive analysisshows that companies anticipate the use of capital mainly for growth opportunities(47%), working capital (27%), debt repayment (12%) and listing expenses (13%).Further analysis indicates that 54% of IPO companies have dedicated more than50% of the amount of capital raised for growth opportunities. Very few companiesplanned to use the capital raised for research and development (R&D) andmarketing activities. The regression results also confirm that the anticipated use ofcapital for R&D and marketing have no significant relationship with total amountof capital raised. In addition, a content analysis of the chairmen’s statements andthe section dedicated for actual use of capital raised in the annual reports revealthat majorly 73 out of 121 companies’ exhibit changes in the anticipated use ofcapital raised. Therefore, this study concludes that relevant parties in the IPOprocess (e.g., regulators, issuers, financial intermediaries and investors) shouldpay close attention to the anticipated and actual use of capital raised.

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Keywords

Anticipated use,
actual use
growth opportunities
working capital
debt repayment
IPO proceeds

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How to Cite
Badru, Bazeet O., Nurwati A. Ahmad Zaluki, and Wan Nordin Wan Hussin. 2016. “ANTICIPATED AND ACTUAL USE OF CAPITAL RAISED IN MALAYSIAN IPO MARKET”. Studies in Business and Economics 19 (1). https://doi.org/10.29117/sbe.2016.0095.
Section
Articles