Context-specific experience and institutional investors' performance

Neupane, Suman and Thapa, Chandra and Vithanage, Kulunu (2023) Context-specific experience and institutional investors' performance. Journal of Banking and Finance. 106786. ISSN 0378-4266 (https://doi.org/10.1016/j.jbankfin.2023.106786)

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Abstract

We examine how context-specific experience influences the performance of institutional investors. Specifically, we explore how previous initial public offering (IPO) trading experience affects foreign institutional investors' selection, bidding, and the profitability of their future IPO investments. We find that investors who participate more frequently (i.e., those with more context-specific experience) exhibit different behaviors from those who participate less frequently. After controlling for investor fixed effects and time-varying heterogeneity, we find that only high-frequency investors improve their profitability over time by appropriately varying their subscriptions across IPOs. The effect of context-specific experience also appears to dominate other forms of general investment experience.

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  Item type:	Article
  ID code:	83862
  Dates:	Date Event 25 January 2023 Published 25 January 2023 Published Online 21 January 2023 Accepted
  Keywords:	institutional investors, IPO investment, performance, investment experience, Finance, Finance, Economics and Econometrics
  Subjects:	Social Sciences > Finance
  Department:	Strathclyde Business School > Accounting and Finance
  Depositing user:	Pure Administrator
  Date deposited:	26 Jan 2023 12:23
  Last modified:	20 Mar 2023 03:06
  URI:	https://strathprints.strath.ac.uk/id/eprint/83862