Malaysian Mesdaq Venture Capital Firms: Signaling Variables Of Firm Value
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Date
2004
Authors
HAJI HARUN, AHMAD NAJIB
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Abstract
This empirical research investigates eleven factors or variables that provide signaling
power of the firm's performance using data of 37 firms listed on Malaysian
MESDAQ market.
The data used for the purpose of this study are extracted from the companies'
.
prospectuses prior to initial public offering (IPO). The explanatory variables
chosen as the independent variables are number of patents, number of R&D members,
number of alliances, annual revenue, debt-equity ratio, cash inflow-sales ratio, profit
margin, underpr.ic ing, owner's interest, Venture Capital/non-Venture Capital, and
Information Technology/non-Information Technology. The dependent variable to
measure firm value is the market capitalization.
A univariate and multiple regressions analysis were used to explain the
relationship of the variables. The univariate regression results showed that
underpricing and annual revenue are positively related to the firm's value. While the
multiple regression analysis indicates that level of underpricing, annual revenue and
number of patents are positively related to firm's value. The implications of this
finding are that firms should underprice the issue price when going public, ensure
high relative, stream of reveniIes and be aggresstve in innovation and to get the
product patented.
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Keywords
Malaysian Mesdaq Venture Capital Firms , Signaling Variables Of Firm Value