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

Suman Neupane; Krishna Paudyal; Chandra Thapa

doi:10.1016/j.jbankfin.2014.04.010

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

Suman Neupane, Krishna Paudyal, Chandra Thapa

Accounting And Finance

Research output: Contribution to journal › Article

9 Citations (Scopus)

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.

Language	English
Pages	207-218
Number of pages	12
Journal	Journal of Banking and Finance
Volume	44
Early online date	18 Apr 2014
DOIs	10.1016/j.jbankfin.2014.04.010
Publication status	Published - Jul 2014

Fingerprint

Market sentiment

Investors

Institutional investors

Subscription

Grey market

India

Investment decision

Model specification

Retail

Alternative models

Participation

Keywords

initial public offerings
transparency
IPO grade
retail investors
institutional investors
grey market

Cite this

Neupane, S., Paudyal, K., & Thapa, C. (2014). Firm quality or market sentiment: what matters more for IPO investors? Journal of Banking and Finance, 44, 207-218. https://doi.org/10.1016/j.jbankfin.2014.04.010

Neupane, Suman ; Paudyal, Krishna ; Thapa, Chandra. / Firm quality or market sentiment : what matters more for IPO investors?. In: Journal of Banking and Finance. 2014 ; Vol. 44. pp. 207-218.

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Neupane, S, Paudyal, K & Thapa, C 2014, 'Firm quality or market sentiment: what matters more for IPO investors?' Journal of Banking and Finance, vol. 44, pp. 207-218. https://doi.org/10.1016/j.jbankfin.2014.04.010

Firm quality or market sentiment : what matters more for IPO investors? / Neupane, Suman; Paudyal, Krishna ; Thapa, Chandra.

In: Journal of Banking and Finance, Vol. 44, 07.2014, p. 207-218.

Research output: Contribution to journal › Article

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PY - 2014/7

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