Firm quality or market sentiment : what matters more for IPO investors?

Neupane, Suman and Paudyal, Krishna and Thapa, Chandra (2014) Firm quality or market sentiment : what matters more for IPO investors? Journal of Banking and Finance, 44. pp. 207-218. ISSN 0378-4266 (https://doi.org/10.1016/j.jbankfin.2014.04.010)

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Abstract

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.

ORCID iDs

Neupane, Suman, Paudyal, Krishna ORCID logoORCID: https://orcid.org/0000-0002-0372-304X and Thapa, Chandra ORCID logoORCID: https://orcid.org/0000-0001-8661-8079;
  • Item type:Article
    ID code:49958
    Dates:
    Date
    Event
    July 2014
    Published
    18 April 2014
    Published Online
    9 April 2014
    Accepted
    Notes:NOTICE: this is the author's version of a work that was accepted for publication in Journal of Banking and Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Banking and Finance, [44, (07/2014)] doi:10.1016/j.jbankfin.2014.04.010
    Subjects:Social Sciences > Commerce > Accounting
    Social Sciences > Finance
    Department:Strathclyde Business School > Accounting and Finance
    Depositing user: Pure Administrator
    Date deposited:21 Oct 2014 12:35
    Last modified:11 Nov 2024 10:49
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/49958
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