Earnings performance of financial and non-financial IPOs in India: an empirical analysis based on market timing

Abstract

Purpose The purpose of this study is to see if market timing predicts the first reporting of earnings performance after the issue, i.e. the issue-year earnings performance. Furthermore, this study examines the behaviour of financial and non-financial issuers’ performance in the light of varied market timings. Design/methodology/approach This study focuses on 785 NSE-listed initial public offerings that took place between April 2010 and December 2021. This study evaluates market timing by using moving averages. Using multiple regression analysis, the research further investigates the impact of market timing on issue-year earnings performance for financial and non-financial issuers on the basis of an interaction (moderation) effect. Findings This study finds that there is a significant presence of market timing in India, which predicts issue-year earnings performance. This study also demonstrates that hot market issuers’ performance is heavily influenced by market timing for non-financial issuers only. However, financial companies are not influenced by market timing. Research limitations/implications The findings of this study will assist the potential investors, analysts and stakeholders about performance of public issuers in India. Lower earnings performance for hot market non-financial issuers implies that the issuers’ market performance may not be supported by earnings figures. A market performance that is not synchronous with earnings will not last long. The findings of this study hold implications to the regulators as well to keep an eye on issuers’ earnings performance alongside the stock performance. Apart from that, the observations in context of financial and non-financial issuers provide insight about the variation in performance of public issues on the basis of background. Originality/value To the best of the authors’ knowledge, this is the only study to examine earnings performance in the context of market timing in India. This study holds significance in terms of methodology for anticipating the presence of market timing and the study of interaction effects. Moreover, it is one of the few studies that has focused on comparing financial and non-financial issuers around the world.

Borsa İstanbul'daki Halka Arzlar Üzerine CRITIC ve EDAS Yöntemleriyle Karşılaştırmalı Bir Araştırma

“…yılları arasında İstanbul Menkul Kıymetler Borsası'nda işlem gören 163 şirket verisi üzerinden ilk halka arz getiri ve performans analizini gerçekleştirdiği çalışmasında, Türkiye'de halka arzların ilk işlem gününde şirketlerin ortalama %13,1 daha düşük fiyatlandırıldığını tespit etmiştir. İlk halka arz aşamasında düşük fiyatlamanın, sanayi firmaları için %11,7, finans firmaları için %15 ve diğerleri için %17,6 olduğu ve genel olarak bankacılık grubu haricinde, tüm alt sektörlerde istatistiksel olarak anlamlı yönde düşük fiyatlama yapılmış olduğu sonucuna ulaşılmıştır Dhanda & Singh (2023),. Hindistan'da Nisan 2010-Aralık 2021 dönemleri arasında halka arz edilen 785 şirketin halka arz piyasa zamanlamasının finansal olan ve olmayan şirketler açısından hisse performans ve getirisi üzerindeki etkisini analiz ettikleri çalışmalarında, halka arzda zamanlamanın finansal olmayan şirketler için düşük kazanç performansı açısından önemli olduğunu tespit etmişlerdir.…”