ABSTRACT
The aim of this study is to examine the effect of the intended use of Initial Public Offerings (IPO) proceeds on the market performance of stocks in Indonesia Stock Exchange (IDX). The test was conducted by multiple linear regression. The purpose was to find out whether the information in the prospectus of stock offerings related to IPO proceeds utilization for acquisition, group financing, long-term investment, debt repayment, and working capital, affect both the initial and the long-term stock returns. The sample consisted of 115 companies that made initial public offerings in Indonesia Stock Exchange during the period of 2006-2013. The results showed that the disclosure of specific information about the use of funds for acquisitions negatively affected the initial returns and long-term market performance. This result is expected to provide a foundation for capital market authorities to further encourage the quality of information disclosure of issuers in order to minimize information asymmetry in the primary market.
