The Role of Initial Return to Market Value and Entrepreneur Ownership in Indonesia

Abstract

Initial pricing is done through negotiations, the company sets the offering price to achieve success in its IPO process. The difference in the ratio between the opening and closing prices is an initial return that can provide capital gains for shareholders. The gap between informed and uninformed investors makes stock prices a measure of market value for investors. The specific purpose of this research was conducted to determine the of the proportion of share ownership by entrepreneur ownership on the market value of equity and on the initial return. In addition, to determine the direct effect of the initial rate of return on market equity. As well as the effect of Initial Return in mediating the relationship between entrepreneur ownership and market value of equity. This research method is quantitative, with purposive sampling technique. While the data collection method used is a survey. The object of this research consisted of 228 companies that did their first listing for the 2008-2017 period on the Indonesia Stock Exchange. This study uses a simple linear regression analysis by doing the correlation test, F test, and t-test. The results of this research describe that all regression relationships have p values which are below the significance level of 0.05. Meanwhile, the findings on the role of initial return as a mediating variable made the value of the coefficient B decrease from 1.103 to 0.095. Thus it can be concluded that all hypotheses are supported with a significant and positive influence. On the effect of initial return in the relationship between entrepreneur ownership and market value, it has a significant effect with a partially mediating role.