FLIPPING ACTIVITY AND UNDERPRICING PHENOMENON IN INDONESIA STOCK EXCHANGE
Keywords:Flipping, Initial Public Offerings, Underpricing, disposition effect, fear of regret
Underwriters, as well as issuers, show ambiguity toward the flipping activity or selling initially public offered stocks (IPO stocks) in the first trading day. On one side, they are naturally against the flipping activity because it is considered to decrease IPO performances, especially in the case of weak offerings. However, flipping activity is also needed to show liquidity of the IPO stock in the secondary market. Several studies indicate that there is a relationship between flipping activity and underpricing phenomenon. Previous research also shows that by studying flipping activity, we can also learn about disposition effect in the primary market. In this study we investigate the relationship between flipping activity and underpricing phenomenon and the presence of disposition effect in Indonesian primary market. Further, the study also test whether the investors’ decision to flip the underpricing stock is a rational decision or because of the fear of regret. The result shows that disposition effect is not found in Indonesian primary market. We also found that there are different level of flipping activities in different level of underpricing, and investor’s decision to flip the underpricing stocks is actually a rational decision.
Jurnal Reviu Akuntansi dan Keuangan is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).