A review of the flipping activity of IPO: Evidences from developed and emerging markets

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Abstract

This paper reviews the literature on the flipping activity of initial public offerings (IPOs). To achieve the objective of this study, the papers indexed in the Scopus data repository and Google Scholar were employed. Based on the review, it was discovered that the extent of flipping varies significantly across countries. The emerging markets have a higher rate of IPO flipping than developed markets, which captures the high information asymmetry prevalence in the emerging markets. In addition, some significant variables were found to influence filliping activity. This includes underwriters, institutional investors, initial return, market conditions, lock-up provision, and issue size. Despite the identified variables that were found to influence flipping activity, there remain some variables that have not been considered. Some of these variables include institutional settings, listing regulations, political factors, and pre-IPO information in the prospectus that could give the research a promising field. The investigation of these variables will be assisting prospective investors in making informed decisions when investing in IPOs in order to maximise their profits.

Keywords: Initial Public Offerings, Flipping Activity, Demand and Supply, Information Asymmetry

Authors’ individual contribution: Validation — R.M.-R.; Resources — R.M.-R.; Writing — Original Draft — A.A.; Writing — Review & Editing — N.C.-Y.; Supervision — R.M.-R.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G12, G14, G18, G38

Received: 01.09.2021
Accepted: 31.01.2022
Published online: 02.02.2022

How to cite this paper: Anwar, A., Mohd-Rashid, R., & Che-Yahya, N. (2022). A review of the flipping activity of IPO: Evidences from developed and emerging markets. Corporate Governance and Organizational Behavior Review, 6(1), 56–63. https://doi.org/10.22495/cgobrv6i1p4