Capital Markets LIFE AFTER IPO:

590 their holdings in the company and utilize the funds generated to diversify their personal portfolio and pursue new ventures at the company level. Reflecting the importance of this going public decision of a company, there has been numerous empirical literatures focusing prominently on IPO. However, these literatures have surprisingly ignored the investigation to the actual utilization of proceeds from this IPO. As an alternative, the majority of them discuss about the under pricing, the long-run performance, and the time- clustering of IPOs Ibbotson, Sindelar, Ritter, 1994; Jenkinson Ljungqvist, 2001; or Ritter, 2003. In addition, most corporate finance literatures limit themselves to describing the institutional aspects of this decision, providing only a few remarks on the investigation of the actual utilization of the generated IPO funds. As a matter of fact, this information is very useful for the investors to make optimal investment decisions because this particular information can enable them to have a better view on how the company actually utilizes their money to increase the shareholder‘s wealth. Moreover, this growing significance in the decision of a company to go public can be considered as particularly high in Indonesia. As the evidence, according to the data from the Indonesia Stock Exchange IDX, the ratio of market capitalization to the Gross Domestic Products GDP in Indonesia is relatively low 14.7 in 2002, 29.4 in 2005, 37 in 2006, and 53 in 2007 being compared to other Asian countries like Malaysia and Singapore, which ratios have exceeded 200. 81 However, it can be seen that this ratio keeps increasing from year to year, which depicts the growing potential of capital markets in Indonesia that is very considerable. Accordingly, capital markets 81 Source: Danareksa Research Institute, Analisa Faktor Pencetus Voluntarily Delisting di Pasar Modal Indonesia 2007. Retrieved December 27, 2007, from http:www.danareksa-research.com