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Exploring intellectual capital disclosure as a mediator for the relationship between IPO firm-specific characteristics and underpricing

Shaw Warn Too (Business school, University of Nottingham Malaysia, Semenyih, Malaysia)
Wan Fadzilah Wan Yusoff (Graduate School of Management, Multimedia University, Cyberjaya, Malaysia)

Journal of Intellectual Capital

ISSN: 1469-1930

Article publication date: 13 July 2015




The purpose of this paper is to examine the direct and indirect impact of firm-specific characteristics on the level of underpricing among Malaysian initial public offerings (IPOs).


Content analysis of IPO prospectuses was used for 331 firms underwent listing between 2002 and 2008. The extent of disclosure was computed by applying the disclosure index of Bukh et al. (2005).


Of the five firm characteristics examined, there is a direct relationship between the firm’s financial performance and the level of foreign activity, and the level of underpricing, instead of being mediated through disclosure. However, some firm characteristics have direct influence on the extent of disclosure but do not have any influence on underpricing.

Research limitations/implications

This empirical study concentrates on the Malaysian IPOs on a single disclosure mechanism. Other disclosure items can be examined together with the intellectual capital disclosure items.

Practical implications

As the findings reveal that the extent of disclosure is relatively low in influencing the level of underpricing. Had the disclosure been higher, it may have some influence on underpricing. The accounting governance board need to regulate the disclosures of the intangible resources so that the level of underpricing can be minimized.


This study provides new insight for the examination of direct and indirect (through disclosure) association between firm-specific characteristics and underpricing. The findings shed some lights to the IPO issuers to enhance disclosure so that the cost of capital can be reduced.



Too, S.W. and Wan Yusoff, W.F. (2015), "Exploring intellectual capital disclosure as a mediator for the relationship between IPO firm-specific characteristics and underpricing", Journal of Intellectual Capital, Vol. 16 No. 3, pp. 639-660.



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