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years 1997-1999 whose pre-income book value of equity is positive and income before non-recurring items is negative. Using a logarithmic
specification, he finds that IPO valuation based on offer price and first-day closing price is positively and linearly related to the pre-income book value of
equity, but negatively and concavely related to income before non-recurring items. Consistent with the argument that large RD and marketing costs are
intangible assets and not period expenses, he documents that offer values are increasing and concave in RD and marketing costs. Further, IPO values are
unrelated to sales and cost of goods sold expenses. In Sanjai Bhagat and Srinivangans Rangan 2003:8 there are statement
from Bartov, Mohanram, and Seethamraju 2002, hereafter BMS, focus on the valuation of 98 internet IPOs and 98 offer-date and size-matched non-internet
IPOs that were completed during 1996-1999. Their conclusions are based on per share regressions. For internet IPOs, they find that cash flows, sales, and
sales growth are significantly related to offer prices at the filing date and at the offer date. In contrast, earnings, book value of equity, and RD per share
do not bear a significant relation to offer prices. 7 When they consider first-day closing prices, they find that, with the exception of sales growth and RD per
share, investors do not value the financial statement variables reported by internet firms
.
In Wan Nordin Wan Husen journal 2006:4 there is study from Claessens et al. 2002 show that based on 1996 data on eight East Asian
45
countries, higher cash flow rights attached to the largest controlling shareholders are associated with a higher market valuation, measured by the
market-to-book ratio of assets. In contrast, higher control rights are associated with a lower valuation. Furthermore, a large wedge between cash flow rights
and control rights leads to value losses.7 In sum, the results suggest that 1 there is a positive incentive effect associated with high cash flow rights in the
hands of the controlling shareholders and 2 the risk of expropriation is particularly severe when the discrepancy between cash flow rights and control
rights is high. When the sample is segmented based on the types of ultimate owner family-controlled, statecontrolled, widely held financial institution or
widely held corporation, the results on expropriation are found to be strongest for family owned companies, moderate for state–controlled companies and
negligible for widely held corporations
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8. Logical Framework
Figure 2.2 : Theoretical Framework
Sam pling Process Dependent Variable
Independent Variable
Init ial Public Offering Financial Rat ios
CFCL, NWTLFA, GPS, NIS, OITL, NWS, NITL, NINW,
NWTL Calculat e based on
operat ional variable Calculat e based on
operat ional variable Regression M odel
Y =
= α + βCFCL
1
+ βNWTLFA
2
+ βGPS
3
+ βNIS
4
+ βOITL
5
+ βNWS
6
+
Regression m odel t est Hypot hesis t est
Analysis Conclusion
BEI
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Figure 2.2 : Initial Public Offering Model
IPO CFCL
NWTLFA GPS
NIS OITL
NWS NITL
NINW NWTL
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9. Hypothesis
Hypothesis have been developed for this study based on dependent and independent variables are given below:
H
1
: Cash Flow to Current Liabilities has an influence toward Initial Public Offering
H : Cash Flow to Current Liabilities doesn’t have an influence
toward Initial Public Offering H
2
: Net Worth and Total Liabilities to fixed Asset has an influence toward Initial Public Offering
H : Net Worth and Total Liabilities to fixed Asset doesn’t have an
influence toward Initial Public Offering H
3
: Gross Profit to Sales has an influence toward Initial Public Offering
H : Gross Profit to Sales doesn’t hav an influence toward Initial
Public Offering H
4
: Net Income to Sales has an influence toward Initial Public Offering
H : Net Income to Sales doesn’t have an influence toward Initial
Public Offering
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H
5
: Operating Income to Total Liabilities has an influence toward Initial Public Offering
H : Operating Income to Total Liabilities doesn’t have an influence
toward Initial Public Offering H
6
: Net Worth to Sales has an influence toward Initial Public Offering
H : Net Worth to Sales doesn’t have an influence toward Initial
Public Offering H
7
: Net Income to total Liabilities has an influence toward Initial Public Offering
H : Net Income to total Liabilities doesn’t have an influence
toward Initial Public Offering H
8
: Net Income to Net Worth has an influence toward Initial Public Offering
H : Net Income to Net Worth doesn’t have an influence toward
Initial Public Offering H
9
: Net Worth to Total Liabilities has an influence toward Initial Public Offering
H : Net Worth to Total Liabilities doesn’t have an influence toward
Initial Public Offering
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CHAPTER III METHODOLOGY
A. Data Collection Method
A type of data used is secondary data. Data is used in this study were obtained from financial report those gotten from Indonesia Stock
Exchange. B.
Research Scope
This research is quantitative data used are secondary data. The sample used was data from the initial public offering Y, and financial
ratios X with sub variables are Cash Flow to Current Liabilities X1 , Net Worth and Total Liabilities to Fixed Assets X2, Gross Profit to Sales
X3, Net Income to Sales X4, Operating Income to Total Liabilities X5, Net Worth to Sales X6, Net Income to Total Liabilities X7, Net
Income to Net Worth X8 and Net Worth to Total Liabilities X9. In this research will be used ratio that was used by previous
research Mas’ud Machfoedz which 9 ratios where the ratios have significant influence to predict company future profit. Those ratios are
Total Go Public company that listed in Stock exchange Jakarta are 422 companies which divided into some sectors, among them are banking
