Intended Use of IPO Proceeds and Survival of Listed Companies in Malaysia

Siti Sarah Alyasa-Gan and Norliza Che-Yahya
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Siti Sarah Alyasa-Gan: Faculty of Business and Management, Universiti Teknologi MARA, Kampus Puncak Alam, Puncak Alam 42300, Selangor, Malaysia
Norliza Che-Yahya: Faculty of Business and Management, Universiti Teknologi MARA, Kampus Puncak Alam, Puncak Alam 42300, Selangor, Malaysia

JRFM, 2022, vol. 15, issue 3, 1-14

Abstract: In the context of Malaysian companies’ survival, the potential role of intended use of proceeds as an influential factor remains unfamiliar. This study examines the link between the intended use of IPO proceeds and the survival of 423 Malaysian listed companies over the period of 2000–2014. This study distinguishes the use of IPO proceeds into three segregations: growth opportunities, debt repayment, and working capital. Employing the Accelerated Failure Time (AFT) survival model, the overall evidence shows a statistically significant effect of the intended use of IPO proceeds for growth opportunities and debt repayment on companies’ post-IPO survival. Furthermore, company survival was found to be consistently improved when they allocated less than 50% of their IPO proceeds, regardless of the purposes (growth, repay debt or general). These results highlight the importance of the intended use of IPO proceeds on the survival of newly listed companies, and provide insights for policymakers on the management of IPO proceeds for long-term survival.

Keywords: initial public offerings; survival; intended use of IPO proceeds; Malaysian market; Accelerated Failure Time model (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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