Determinants of the first-day return of listing companies on Ho Chi Minh stock exchange from 2011 to 2014

Abstract

Vietnamese stock market has been developing substantially over the last 25 years thanks to great efforts from the governments. Many corporations are raising awareness of benefit of going public, making listing rate on up trend. However, many issuing companies gained enormous profits and increasing assets while the others struggled to sell all of their shares to investors. By incorporating a sample of 52 listing events from 2011 to 2014 on Hochiminh Stock Exchange, this thesis employs OLS regression model to examine the relationship between the first-day returns of offering events and investor sentiment as well as firm characteristics. The result suggests that VN-Index volume, net income significantly move in positive direction with the first-day returns while dividend rate moves in opposite direction. In addition, VN-Index return, insider retention, shares held by strategic investors and leverage are found to have neutral effects. Finally, the first-day return prediction formula is developed.