Beyond Going Public: Post-IPO Financial Performance, Capital Structure Adjustment, and Profitability Stagnation in Indonesian Listed Firms
DOI:
https://doi.org/10.53905/Veritas.v2i01.1Keywords:
financial performance, Initial Public Offering, Indonesia Stock Exchange, Wilcoxon Signed-Rank Test, capital structure, agency theoryAbstract
Purpose of the study: Initial Public Offering (IPO) is widely promoted as a strategic corporate action that provides firms with easier access to long-term capital and greater public visibility. Signalling and agency theories predict that going public should be followed by an improvement in corporate financial performance, yet a substantial body of international and Indonesian evidence documents the opposite pattern, commonly referred to as post-IPO operating performance decline.
Methodology: A quantitative comparative design was applied using secondary panel data. The population comprised 22 non-financial companies that conducted an IPO on the IDX in 2013. A purposive sampling technique with three data-availability criteria yielded a final sample of six companies (BBRM, DYAN, MAGP, SAME, SRIL, TPMA). Eight financial ratios were analysed: Current Ratio (CR), Cash Ratio (CAR), Total Debt to Total Asset Ratio (DAR), Total Debt to Equity Ratio (DER), Total Assets Turnover (TATO), Working Capital Turnover (WCTO), Return on Assets (ROA), and Return on Equity (ROE). Because the Shapiro-Wilk normality test indicated non-normally distributed differences, the non-parametric Wilcoxon Signed-Rank Test was used to compare paired pre- and post-IPO ratios at a 5% significance level.
Results: Only DAR and DER exhibited a statistically significant improvement (α = 5%), and this improvement was confined to certain pre/post sub-period comparisons rather than holding uniformly across the full three-year window. CR, CAR, TATO, WCTO, ROA, and ROE showed no statistically significant difference. Viewed as a whole, corporate financial performance did not improve significantly after the IPO.
Conclusions: IPO proceeds appear to mechanically strengthen the capital-structure ratios (leverage) of sample firms, but this effect does not translate into broader gains in liquidity, activity, or profitability within a three-year horizon, plausibly because of a short adjustment period and rising post-listing agency costs. These findings caution investors and issuers against assuming that going public automatically produces an across-the-board improvement in financial performance.
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