Title : INFORMATION ASYMMETRY IN FIRST SEASONED EQUITY OFFERING IN THE INDONESIAN CAPITAL MARKET
Author : Harlina Meidiaswati
Item Type : Thesis (Dissertation)
Abstract
This study aims to find out whether Signaling Theory or Market Feedback Theory can better explain the relationship between Initial Public Offering (IPO) and First Seasoned Equity Offering (FiSEO) in the Indonesian Capital Market. It is hoped that the findings of this study can provide a reference for investors and potential investors to consider the characteristics of shares after an IPO in the Indonesian Capital Market. For issuers, the results of this research are expected to provide information about the Indonesian Capital Market, especially regarding FiSEO policies, asymmetric information and factors that need to be paid attention to regarding FiSEO policies. A study of 128 companies as study objects shows that Signal Theory with the Market Adjudicated Initial Return (MAIR) proxy can explain the speed of FiSEO in the Indonesian Capital Market. The application of Signal Theory indicates that in the Indonesian Capital Market issuers have an understanding of their value, although limited, and try to inform their value when conducting an IPO. However, regarding the offering value during FiSEO, Market Feedback Theory is better able to explain FiSEO policies than Signal Theory. This condition can occur because even though the issuer understands the business and its business, the market has a different mechanism for assessing the issuer. As a new player in the capital market, issuers who do not really understand how the market evaluates their companies, utilize feedback from the market in the form of stock market price movements as a consideration for company policies, especially FiSEO. This result is supported by the condition of the Indonesian Capital Market which is still dominated by foreign investors with better investment skills and knowledge than local investors. Other findings of this research indicate the influence of the corporate lifecycle on the speed of carrying out FiSEO. Further research can be directed to answer the question whether FiSEO in Indonesia is something that has been planned; is a decision to take advantage of momentum in the market (Baker and Wugler, 2002); or the impact of corporate lifecycle dynamics (DeAngelo et al., 2009, Hovakimian, 2010). It is also necessary to consider the use of quantile regression for testing with data distributions that are not homogeneous and do not have a standard form as in this study.
Uncontrolled Keywords: IPO, FiSEO, asymmetric information, Signaling Theory, Market Feedback Theory
