Luận văn thạc sĩ UEH key factors affecting initial public offering return an examination of

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

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Phan Thi Thuy Mai

KEY FACTORS AFFECTING INITIAL

PUBLIC OFFERING RETURN. AN

EXAMINATION OF COMPANIES

GOING PUBLIC IN VIETNAM.

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2013

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

------------------------------

Phan Thi Thuy Mai

KEY FACTORS AFFECTING INITIAL

PUBLIC OFFERING RETURN. AN

EXAMINATION OF COMPANIES

GOING PUBLIC IN VIETNAM.

ID: MBUS111021

MASTER OF BUSINESS (Honours)

SUPERVISOR: Dr. Pham Quoc Hung

Ho Chi Minh City – Year 2013

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ABSTRACT

This research aims at identifying main factors affecting on IPO return

of companies going public in Vietnam. I took a simple random sample of 166 from

all the companies that have come up with an IPO since 2007 to the third quarter of

2013 in Vietnam’s Stock exchange to identify the relationship between

Underwriter prestige, Total asset, Leverage, Age (Number of years from the year

founded to the year prior to IPO), Percentage of state ownership after IPO and

Number of shares offered when IPO (independent variables) with the IPO return

(dependent variable).

IPO return is one of the most attractive investments in every stock market.

By using the published data that can be acquired by general investors, I

investigate those data which have relations to the return of IPO. Finally, I develop

and test the prediction model.

Keywords: Initial public offerings, IPO Return, underwriter prestige,

total asset, leverage, state ownership.

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ACKNOWLEDGEMENT

Firstly, I would like to send my sincere thanks to my supervisor, Dr. Pham

Quoc Hung for his enthusiastic support during the research. He has helped me

take the knowledge, know the way of research in order to complete this thesis.

Secondly, I would like to thank the faculty and staff of International

School of Business (ISB) – University of Economy Ho Chi Minh, especially Prof.

Nguyen Dinh Tho, who has explained clearly and simply during the Research

Design For Master Thesis; and Prof. Dinh Thai Hoang, who has instructed me

how to do research through the Data analysis by SPSS.

Thirdly, I am grateful to my friends and my classmates from ISB MBUS1

for sharing knowledge to me.

Finally, I thank very much to my family and specially to my husband for

their support, understanding and encouragement through my life, particularly in this

time.

Sincerely thanks all.

Phan Thi Thuy Mai

Dong Nai, September 2013

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TABLE OF CONTENTS

ABSTRACT ................................................................................................................. 1

ACKNOWLEDGEMENT ........................................................................................... 2

TABLE OF CONTENTS ............................................................................................. 3

LIST OF TABLES ....................................................................................................... 6

LIST OF FIGURES ..................................................................................................... 7

CHAPTER 1. INTRODUCTION ................................................................................ 8

1.1. Background....................................................................................................8

1.2. Research problems.........................................................................................9

1.3. Research objectives......................................................................................12

1.4. Research scope ..............................................................................................12

1.5. Outline of study............................................................................................13

CHAPTER II. LITERATURE REVIEW.................................................................15

2.1. The concept of IPO ......................................................................................15

2.1.1. Definition of IPO ...................................................................................15

2.1.2. Requirements of IPO.............................................................................16

2.1.3. IPO Auction...........................................................................................17

2.1.4. IPO procedures: ....................................................................................19

2.1.5. Advantages and disadvantages in IPO.................................................21

2.2. The concept of IPO Return.........................................................................23

2.3. IPO pricing..................................................................................................25

2.4. Related research and hypothesis development..........................................28

2.4.1. Underwriter prestige .............................................................................28

2.4.2. Firm size (Total asset of the year prior to IPO)...................................29

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2.4.3. Leverage of the year prior to IPO .........................................................30

2.4.4. AGE (number of years from founding to the year prior to IPO).........31

2.4.5. State ownership (percentage of state ownership after IPO).................31

2.4.6. Volume of IPO (Number of shares offered when IPO).........................32

2.5. Hypotheses and research model................................................................32

CHAPTER III. RESEARCH METHOD .................................................................. 35

3.1. Research design............................................................................................35

3.2. Collecting data .............................................................................................35

3.3. Research process..........................................................................................36

3.4. Measurement scales .....................................................................................37

3.5. Analysis ........................................................................................................39

CHAPTER 4. RESULTS AND DISCUSSION .........................................................42

4.1. Sample characteristics ..................................................................................42

4.2. Data description and correlation analysis...................................................43

4.2.1. Data description......................................................................................43

4.2.2. Correlation analysis................................................................................45

4.3. Empirical analysis........................................................................................46

4.3.1. Multiple regression analysis ...................................................................46

4.4. Chapter summary .........................................................................................50

CHAPTER 5. CONCLUSION..................................................................................52

5.1. Implication .....................................................................................................52

5.2. Limitation.......................................................................................................53

5.3. Recommendations..........................................................................................54

References..................................................................................................................57

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Appendix 1: Data of companies going public in Vietnam …………..………....61

Appendix 2: Outliners...............................................................................................65

Appendix 3: Normality and Heteroskedasticity ......................................................66

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Appendix 4: MLR between IPO return and independent variables.......................68

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