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Article
Publication date: 12 February 2018

Kavita Wadhwa and Sudhakara Reddy Syamala

The purpose of this paper is to examine the impact of market timing and pseudo market timing on equity issuance decisions of IPOs in an emerging economy – India. Indian new issues…

591

Abstract

Purpose

The purpose of this paper is to examine the impact of market timing and pseudo market timing on equity issuance decisions of IPOs in an emerging economy – India. Indian new issues market provides a perfect setting to test market timing against pseudo market timing due to two reasons. First, the US literature shows that most underpriced IPOs are highly overvalued and in India, the authors have the evidence of underpricing of IPOs. But whether Indian IPOs are overvalued or not it is yet to be tested. Second, majority of IPOs were issued in India only after the 1991 economic reforms which may signal the evidence for pseudo market timing hypothesis.

Design/methodology/approach

The authors use direct test to examine the impact of market timing and pseudo market timing variables on the IPO activity. The direct tests of market timing and pseudo market timing hypotheses are based on the positive relation of market timing variables and market conditions variables with IPO activity. The authors examine the long-run performance of IPOs by using the calendar-time regression approach to test market timing against pseudo market timing. This serves as indirect test of market timing and pseudo market timing. Evidence of market timing using indirect test shows that there is a decline in the long-run stock performance of IPOs.

Findings

The results show that in India, firms issue equity not just due to market conditions but they also issue equity in order to time the market. The results of market timing are also supported by the calendar-time approach results. However, the authors find that the evidence of market timing is stronger for hot issue markets as compared to cold issue markets.

Originality/value

This is the first study to comprehensively examine market timing and pseudo market timing using direct and indirect tests for an emerging market context.

Details

Managerial Finance, vol. 44 no. 2
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 3 May 2018

Kavita Wadhwa and Sudhakara Reddy Syamala

The purpose of this paper is to study the reallocation of initial public offering (IPO) shares to retail investors, non-institutional buyers (NIBs) and qualified institutional…

475

Abstract

Purpose

The purpose of this paper is to study the reallocation of initial public offering (IPO) shares to retail investors, non-institutional buyers (NIBs) and qualified institutional buyers (QIBs). The authors examine how the reallocation process is related to the pricing decision of the underwriter. The authors also examine the long-run performance of the IPOs classified on the basis of the highest reallocation by retail investors, NIBs and QIBs.

Design/methodology/approach

The authors use regression analysis as well as 2SLS and three-stage least squares models to test the hypotheses. For long-run performance analysis, the authors adopt Carhart’s (1997) four-factor model.

Findings

First, the authors provide evidence that the reallocation of IPO shares for retail investors, NIBs and QIBs is frequent. Second, all three categories of investors are treated differently in the reallocation of underpriced shares. Third, the authors find that the reallocation and pricing strategies are interdependent and both the strategies are used by the underwriter to reward and favor retail investors for showing high level of demand. The authors find that in India, underwriters reward retail investors. Lastly, even though underwriters favor retail investors for reallocation, the authors find that IPOs which receive highest reallocation to retail investors perform poorly in the long run.

Originality/value

This paper is the first paper to show evidence of reallocation of IPO shares by underwriters for an emerging market. The paper is different from other papers as the regulatory regime present in the Indian markets is different from other markets.

Details

International Journal of Managerial Finance, vol. 14 no. 4
Type: Research Article
ISSN: 1743-9132

Keywords

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Article
Publication date: 7 November 2016

Rachita Gupta and Ravi Shankar

The aim of this paper is to develop a model for the prioritization of collusive behaviours within Indian food grain supply chain (FGSC) to enable government authorities, entrusted…

328

Abstract

Purpose

The aim of this paper is to develop a model for the prioritization of collusive behaviours within Indian food grain supply chain (FGSC) to enable government authorities, entrusted with the task of public distribution, to address those frauds based on their priority for making an existing supply chain more sustainable.

Design/methodology/approach

An interval 2-tuple linguistic Technique for Order Preference by Similarity to Ideal Solution (ITL-TOPSIS) method has been used to deal with the problem of prioritization of frauds under incomplete and uncertain information. Unlike traditional methods, this methodology offers an ability to make informed decisions, without loss of information, while factoring in various ambiguities.

Findings

The outcome indicates that the most severe fraud is adulteration, which adversely impacts the health of a person. Bogus Ration Card comes next, as it results into the distribution of grains to non-poor, ineligible population rather than the deserving beneficiaries. Next is diversion, where diverted food grains end up being sold at much higher rates than specified subsidized rates. Theft is least severe, as this would not affect FGSC much until done on large scale.

Research limitations/implications

More decision-makers can be consulted to entertain more uncertainty and ambiguity. Also, a comparative study can be performed using different methodologies.

Practical Implications

The proposed modelling could empower various governmental and non-governmental regulatory bodies in formulation of food policies to effectively tackle the problem of inappropriate delivery of food to the unintended population and to take necessary informed decisions for ensuring food security and safety to the society at large.

Originality/value

There is a dearth of studies related to the prioritization of frauds within FGSC. This research bridges the gap in literature by providing a decision-making framework for prioritizing collusive behaviour under ambiguous and uncertain information.

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Article
Publication date: 4 July 2016

Purna Chandra Parida and Kailash Chandra Pradhan

This paper aims to make an attempt to identify labour intensity of organized manufacturing industries in India using the Annual Survey of Industry (ASI) data at three-digit level…

1380

Abstract

Purpose

This paper aims to make an attempt to identify labour intensity of organized manufacturing industries in India using the Annual Survey of Industry (ASI) data at three-digit level. It estimates total factor productivity growth (TFPG) and technical efficiency for both labour intensive and all manufacturing industries during the pre- and post-reforms periods.

Design/methodology/approach

The study uses three approaches to estimate TFPG. They are growth accounting (GA) (non-parametric), production function with correction for endogeneity – Levinsohn-Petrin (LP) (semi-parametric) and stochastic production frontier (SPF) analysis (parametric). The study uses ASI data published by Central Statistical Organization, Government of India for the period 1980-1981 to 2007-2008 for the analysis.

Findings

The study finds that the rate of decline of the labour intensity is more pronounced in the case of labour-intensive industries than all the manufacturing industries. The results of GA method suggest that the TFPG of labour-intensive industries has declined continuously from the pre-reforms period to the post-reforms period. Similarly, LP method indicates a continuous decline in TFPG of labour-intensive manufacturing industries during the post-reforms period. Interestingly, the results of SPF method also corroborate the findings of earlier two methods at the aggregate level but vary at a certain degree at the disaggregated level.

Originality/value

This paper is useful in the context of India considering the importance given to labour-intensive industries by the present government in terms of reviving the sector and improving the productivity and output.

Details

International Journal of Development Issues, vol. 15 no. 2
Type: Research Article
ISSN: 1446-8956

Keywords

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