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Title: IPOs with reserved shares and their post-IPO performance
Authors: Chua, Chiok Woon
Zhang, Jerica Meiqing
Yee, Joyce Puay Ping
Keywords: DRNTU::Business::Finance::Equity
Issue Date: 2010
Abstract: Can the allocation of reserved shares to a firm’s employees be exploited as a possible signaling tool that separates high-quality firms from low-quality firms at their initial public offering (IPO)? In this paper, we will explore the signaling effect of reserved shares by investigating the relationship between reserved shares and a firm’s post-IPO performance. Specifically, we will analyse a firm’s post-IPO performance based on its stock returns and operating performance. Utilising cumulative market-adjusted abnormal returns (MAAR), this study provides preliminary evidence that firms with a greater proportion of reserved shares generally experience higher stock returns. However, employing return on assets (ROA), return on equity (ROE) and return on sales (ROS) as proxies of a firm’s operating performance, we find no significant relationship between reserved shares and a firm’s operating performance.
Rights: Nanyang Technological University
Fulltext Permission: restricted
Fulltext Availability: With Fulltext
Appears in Collections:NBS Student Reports (FYP/IA/PA/PI)

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