Survivability of IPO Companies in the Malaysian Market. Evidence from the Kaplan-Meier Survival Analysis

Abstract

This study aims to examine the survivability of IPO companies in the Malaysian market. The importance of this study goes consistent with Bursa Malaysia’s initiatives in establishing the Practice Notes and Guidance Notes frameworks in elongating the survivability of IPO companies. Responding to the urge, this study examines the survival rate of 527 IPO companies listed in Bursa Malaysia from January 2000 to December 2014 (to observe companies' survival until early August 2021) using the Kaplan-Meier (K-M) survival analysis model. This study reports the survival rate of IPO companies in Malaysia to be at 62.81 percent after five years of listing and 56.91 percent after seven years of listing. Past studies have reported a higher survival rate of IPO companies in the Malaysian market. However, the survival rate of IPO companies should vary according to the definition a study adopts in segregating between surviving and non-surviving companies. Further investigation of the K-M log-rank test shows that the survival rate of companies differs according to their listing years, sectors and markets. Comparison between the survival rate of the Main Market and ACE Market reveals that over the seven years post-IPO, companies listed in the Main Market have a 7.55 percent higher survival rate than companies listed in the ACE Market over the seven years of the observation period. As such, it is suggestable that future researchers further examine the contributable factors for IPO companies to survive longer post-IPO using other survival analysis methods (semi-parametric or parametric).