REPRESENTATIVE HEURISTICS AND THE AFTERMARKET DYNAMIC OF THE NEW LISTINGS IN MALAYSIA

Abstract

This paper investigates the influences of representative heuristics and ex-ante factors on the immediate aftermarket dynamics of new issues. The two immediate aftermarket dynamics covered in this study are opening-day-spread and flipping activities. A total of 177 new issue samples listed on the Main Board of Bursa Malaysia (formerly known as Kuala Lumpur Stock Exchange) from 1991 to 2008 are used in this study. Results support a positive significant influence of representative heuristics on opening-day-spread. On the other hand, a negative relationship was reported between representative heuristics and flipping activities. Among the ex-ante variables included in the model, market condition was found to have predictive power over immediate aftermarket dynamics.