Context-specific experience and institutional investors' performance

Suman Neupane, Chandra Thapa, Kulunu Vithanage

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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.
Original languageEnglish
Article number106786
Number of pages18
JournalJournal of Banking and Finance
Early online date25 Jan 2023
Publication statusPublished - 30 Apr 2023


  • institutional investors
  • IPO investment
  • performance
  • investment experience


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