pre-IPO D/E ratio less than 10%. However, the median D/E ratios of Singapore firms are still
1.8% lower than in Hong Kong. Overall, firms listed in Singapore perform better than the
firms listed in Hong Kong and both markets have conservative capital structure. This seems to
be consistent with the signaling theory and hypothesis 1-a and c since in order to signal the
‘good’ quality of the firms to their investors, firms listed in Singapore will underprice more
than the firms in Hong Kong. However, the average and median of net assets in Exhibit 4.2