Information content of IPO grading

Deb, Saikat Sovan; Marisetty, Vijaya B.

doi:10.1016/j.jbankfin.2010.02.018

Cited by 79 publications

(58 citation statements)

References 35 publications

(40 reference statements)

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“…12 Studying the Latin American market for the period 1980-1990, Aggarwal, Leal, and Hernandez (1993 found initial 1-day returns of 78.5%, 16.7%, and 2.8% for Brazil, Chile, and Mexico, respectively. 13 For example, Deb and Marisetty (2010) for the Indian market, Ekkayokkaya andPengniti (2012) in Thailand, andHearn (2011) in West Africa.…”

Section: Discussionmentioning

confidence: 99%

“…For example, Liu and Ritter (2011) modeled the IPO underwriter market where a small number of underwriter firms with oligopolistic power seek research coverage from influential analysts, which results in more underpricing. 2 Deb and Marisetty (2010) studied the effect of governance rules on IPO underpricing for the Indian market. Similar papers are presented by Ekkayokkaya and Pengniti (2012) for Thailand, Hearn (2011) for the West African market, and Chong and López-de-Silanes (2007) in Latin America.…”

mentioning

confidence: 99%

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Governance, sentiment analysis, and initial public offering underpricing

González

Guzmán²,

Tellez‐Falla

et al. 2019

Corporate Governance

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Research Question/Issue: What is the relationship between governance, tone in language, and underpricing of initial public offerings (IPOs) in Latin America?Research Findings/Insights: We find a positive (negative) and statistically significant relationship between board size (board independence) and IPO underpricing at the time firms go public. But more importantly, when interacting with corporate governance variables at the firm level, uncertainty in tone still shows statistical significance, which suggests that tone in communications matters for underpricing independently of governance provisions at the firm level.Theoretical/Academic Implications: Bigger boards seem to lead to greater underpricing, whereas more independent boards mitigate it. This finding stresses the relevance of functional convergence in regions with weak institutions such as Latin America. Our results also suggest that tone matters for underpricing even in firms with good governance practices. We argue that tone in corporate communications is a strong signaling mechanism for market participants.Practitioner/Policy Implications: Our results suggest that tone in firms' communications is relevant for market valuation. In the context of family firms in an underresearched context such as Latin America, we show that reputation effect is priced by the market valuation of the IPO.

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Section: Discussionmentioning

confidence: 99%

mentioning

confidence: 99%

Governance, sentiment analysis, and initial public offering underpricing

González

Guzmán²,

Tellez‐Falla

et al. 2019

Corporate Governance

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show abstract

“…While the opportunities to trade in the grey market (and premiums) are usually available for stocks a few days before the opening of the issue (application for subscription), 7 Further information on Indian IPO grading can be found at http://www.sebi.gov.in/faq/ipograding.html (accessed on November 25, 2013). See Deb and Marisetty (2010) for further discussion on IPO grading in India. 8 At the time of writing this paper, only six rating agencies are registered with the SEBI and allowed to provide IPO grading: Credit Analysis and Research Ltd. (CARE), ICRA Ltd., CRISIL House, FITCH Ratings, Brickwork Ratings India Private Ltd., and SME Rating Agency of India Ltd. (SMERA).…”

Section: The Grey Marketmentioning

confidence: 99%

“…Their study, however, does not consider IPO grades and grey market returns. Deb and Marisetty (2010) examine the influence of IPO grades on a number of issues including underpricing, participation of retail and institutional investors and post listing performance. They report that IPO grades successfully capture several firm characteristics including the corporate governance of the firm.…”

Section: Prior Studies and Hypotheses Developmentmentioning

confidence: 99%

“…However, our study differs from theirs on several grounds. First, unlike Deb and Marisetty (2010), we control for the grey market information; second, we use a substantially larger sample (48 vs. 172 IPOs) adding to the reliability of estimates; and finally, we extend the model to account for the potential effects of other factors, including the level of participation of various types of investors. Our study also differs from other prior studies in that we simultaneously analyse the effects of indicators of both company fundamentals-based grading and the indicators of market sentiment that are available to investors at the time of the application for subscription.…”

Section: Prior Studies and Hypotheses Developmentmentioning

confidence: 99%

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Firm Quality or Market Sentiment: What Matters More for IPO Investors?

Neupane

Paudyal²,

Thapa

2012

SSRN Journal

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This paper investigates the investment decisions of IPO investors when equipped with information on both the quality of the firm and the market sentiment. Unique regulatory provisions allow IPO investors in India to have access to the independent assessment of firm quality and information on the participation of other investors, including institutional investors. At the same time, an active grey market reveals market sentiment before the application for subscription is closed. The results, which are robust to alternative model specifications, suggest that the institutional investors' decision is guided almost exclusively by firm quality while the retail investors' decision to participate in IPOs is strongly influenced by market sentiment, even in a highly transparent market where both sets of information are freely available.

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Central bank's money market operations and daily stock returns

Chundakkadan

Sasidharan

2019

Int. J Fin Econ

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The objective of this paper is to examine the relationship between the central bank's daily money market operations in the form of Term Repo and Term Reverse Repo operations on stock returns using daily data. Unlike earlier studies, we use two new monetary measures, namely, Repo Spread and Reverse Repo Spread. Controlling for firm‐specific factors and time dummies and addressing endogeneity issue, we show that the central bank's money market operations have a significant effect on daily returns. Further, we also observe that the inclusion of these monetary variables improves the prediction of the stock returns.

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Information content of IPO grading

Cited by 79 publications

References 35 publications

Governance, sentiment analysis, and initial public offering underpricing

Governance, sentiment analysis, and initial public offering underpricing

Firm Quality or Market Sentiment: What Matters More for IPO Investors?

Central bank's money market operations and daily stock returns

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