Retail Investors in Indian IPOs: The Context

Veluvali, Parimala

doi:10.1007/978-3-030-12756-5_1

Cited by 1 publication

(1 citation statement)

References 3 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…There were many instances of siphoning of securities allocated to retail investors and loss of retail investors' wealth (PIB-Press Information Bureau, 2018). The level of financial literacy among small retail investors is also significantly low; as a result, many investors participate in initial public offerings (IPOs) without conducting sufficient research and ignore firm fundamentals (Veluvali, 2019). India also provides us a unique institutional setting to examine the bidding behaviour of investors.…”

Section: Introductionmentioning

confidence: 99%

Do retail and institutional investors react differently to earnings management? Evidence from Indian IPOs

Priyesh,

Jijo

2023

JAAR

View full text Add to dashboard Cite

PurposeThis study investigates the impact of pre-IPO earnings management on investor demand in the Indian IPO market. It also examines whether earnings management by issuer firms affects IPO valuation, a topic that is underexplored in accounting research.Design/methodology/approachThe study uses the data of 310 IPOs from India during the period 2000–2021. The association between pre-IPO earnings management with investor demand and valuation is tested using cross-sectional ordinary least squares regression models with heteroscedasticity-robust standard errors.FindingsThe study finds that the degree of pre-IPO earnings management impacts retail investor demand, measured as their over-subscription multiple. Pre-IPO earnings management is unrelated to institutional investor bidding. Further, this paper suggests no relation between pre-IPO earnings management and IPO valuation.Research limitations/implicationsFuture studies could explore various other forms of earnings management and their impact on investor demand and valuation.Practical implicationsThe findings of this study will help the investors and regulators to understand the practice of earnings management among IPO firms and how it is related to IPO demand and valuation.Originality/valueThis study contributes to the existing literature on IPO-earnings management and investor demand by documenting that issuer firms engage in earnings management to influence investor demand, particularly retail investor demand. Analysis of IPO valuation reveals that earnings management is mostly unrelated to IPO valuation, contrary to the general perception in the literature.

show abstract

Section: Introductionmentioning

confidence: 99%