COMPANY PERFORMANCE ANALYSIS BEFORE AND AFTER GOING PUBLIC IN INDONESIA STOCK EXCHANGE

Abstract

There is significant information asymmetry between issuers and investor at the Initial Public Offerings (IPO). Some researchers stated that there was no news about issuing firms in the media until in the year of the issue. In the case of IPO’s, usually there is little information about the private firm that is available to the public. Investors have to rely primarily on the financial statements in the offering prospects, which gives the issuers and the underwriters could be incentive to report favorable accounting numbers. This leads to the thought that issuing firms gain improvements in profitability after the offering. Therefore, it is necessary to analyze the stock performance and the company’s operating performance before and after going public in order to know whether going public is an interesting issue to investors and whether going public could increase the company’s operating performance.