Does ownership structure and market sentiment affect the performance of IPOs in India in short run? A dynamic panel data analysis

Singla, Harish Kumar

doi:10.1108/jfmpc-10-2019-0077

Cited by 5 publications

(2 citation statements)

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“…A similar sentiment was drawn by Purkayastha et al (2019), where it was recommended that concentrated promoter ownership mitigates the negative impacts of agency conflict, but exacerbates the negative impacts of conflict between minority and majority shareholders, which may result in reduced valuation and profitability. Similar findings were also stated by Singla (2021), while the impact of concentrated promoter ownership on the performance of initial public offerings in India was examined.…”

Section: Discussionsupporting

confidence: 72%

Financial determinants of value based performance of construction firms in India

Singla

Prakash

2021

IJPPM

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PurposeThe purpose of the study is to examine the value-based performance of firms in construction sector in India using Tobin's Q and Market Capitalization (MCAP) and then determine their significant financial drivers.Design/methodology/approachThe study is based on data from 87 firms engaged in infrastructure, real estate, industrial construction and allied areas in India over a study period of 10 years. Three distinct forms of panel regression models have been developed using Tobin's Q and MCAP as dependent variables. The models developed are using Baltagi's (1981) Error Component 2SLS, Varadharajan-Krishnakumar's (1987) Generalized 2SLS and Arellano – Bower/Blundell – Bond's (1991) dynamic panel.FindingsThe study found that MCAP is a better suited value-based performance measure for construction sector firms in India. The study further reports that the age of the firm, profit after tax, investment in research and development, dividends, leverage and net fixed asset are significant positive drivers, whereas cash flow is a significant negative driver.Research limitations/implicationsThe study is limited to a geographic location; therefore, the findings of this study cannot be generalized.Practical implicationsAs MCAP is a better suited value-based performance measure of a firm in the construction sector, managers should focus on improving profitability, higher research and development activities, higher dividends and higher expenditures on net fixed assets for improvement.Originality/valueThis is an original attempt to examine the value-based performance of firms in the construction sector in India using Tobin's Q and MCAP.

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Section: Discussionsupporting

confidence: 72%

Financial determinants of value based performance of construction firms in India

Singla

Prakash

2021

IJPPM

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“…However, in the later IPO process of the science and innovation version (the first five trading days did not limit the rise and fall), there was still an obvious IPO underpricing phenomenon. Indian scholars Singla and Harish Kumar [4] focused on the impact of investor sentiment on the IPO price of the Indian stock market and distinguished the construction and non-construction sectors. Cook et al and Shao [5] et al both found that IPO companies would actively use mainstream media for information disclosure during listing to achieve an ideal underpricing level.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Investor Sentiment on IPO Underpricing

Chen¹,

Liu²,

Zhu³

2021

Proceedings of the 2021 International Conference on Public Relations and Social Sciences (ICPRSS 2021)

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Investor sentiment is the belief formed by investors based on the expectation of future cash flow of assets and investment risk, which will affect investors' trading behavior to a certain extent. In recent years, more and more scholars have done a lot of research on IPO underpricing from the perspective of investor sentiment. It is found that investor sentiment has a certain effect on the IPO market. Taking 2,955 A-share listed stocks from 2003 to 2020 as samples, this paper uses an econometric regression model to conduct the empirical test, investigates the relationship between investor sentiment and IPO underpricing, and explores the mechanism. The results show that: (1) Investor sentiment has a significant promoting effect on IPO underpricing. Positive investor sentiment will affect the demand for new shares, promoting IPO underpricing. (2) Investor sentiment affects IPO underpricing by affecting the market turnover rate. On the first day of listing, the turnover rate plays a partial intermediary role in the path of investor sentiment affecting IPO underpricing. (3) The effect of investor sentiment on underpricing stocks with lower issue prices is less than that of stocks with higher issue prices.

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Indian start-ups going public: return and volatility of stocks during bear and bull regimes

Das

2023

IJOEM

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PurposeStart-ups are successful in receiving valuation in billions of US dollars prior to initial public offering (IPO). However, to sustain higher valuation, the stocks need to perform consistently after the IPO. Short-run stock performance of India-based start-ups during the first year of IPO listing from March 2021 to March 2022 is analysed.Design/methodology/approachThe paper deals with the new generation start-ups' stock performance in emerging market in terms of total and abnormal return generated in comparison to the market (NIFTY-200). Further, the volatility of returns during bear and bull regimes is analysed through a family of Markov-switching GARCH models using both normal and skewed distributions.FindingsThe results suggest that start-up stocks are more volatile during bear regime than in the bull run in market-based economies where price limit policy does not apply. Besides, the cumulative abnormal return over the market return was lower for majority of start-up IPO stocks.Social implicationsThough negative returns of the start-up stocks during the first year of IPO need not be surprising, higher volatility during bear regime is a matter of concern as it could severely impact retail investors and founders. The results hold implication for IPO regulation in emerging markets and for retail investors desirous of investing in start-up stocks.Originality/valueVolatility of return is examined using a state-space model during the first year of the start-up IPO listing. The study contributes to the emerging market IPO literature by examining IPO performance in market-based economy. Previous IPO performance studies in emerging markets are predominantly based on ecosystems where start-ups are subjected to price limit policy, and it does not reflect the true nature of IPO performance across emerging markets.

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Does ownership structure and market sentiment affect the performance of IPOs in India in short run? A dynamic panel data analysis

Cited by 5 publications

References 61 publications

Financial determinants of value based performance of construction firms in India

Financial determinants of value based performance of construction firms in India

The Impact of Investor Sentiment on IPO Underpricing

Indian start-ups going public: return and volatility of stocks during bear and bull regimes

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