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Finance Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26310
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| Title: | GROUP AFFILIATION AND THE PERFORMANCE OF INITIAL PUBLIC OFFERINGS IN THE
INDIAN STOCK MARKET |
| Authors: | Marisetty, Vijaya B
Subrahmanyam, Marti G |
| Keywords: | Initial Public Offering (IPO)
Underpricing
Business Groups
Certification
Tunneling |
| Issue Date: | Sep-2006 |
| Series/Report no.: | FIN-07-015 |
| Abstract: | We document the effects of group affiliation on the initial performance
of 2,713 Initial Public Offerings (IPOs) in India under three regulatory
regimes during the period 1990-2004. We distinguish between two
competing hypotheses regarding group affiliation: the
“certification” and the “tunneling” hypotheses.
We lend support to the latter by showing that the underpricing of group
companies is higher than that of stand-alone companies. We ascribe the
higher initial returns of group IPOs to investor overreaction. Ex post,
we find that group-affiliated companies have a higher probability of
survival over the long term: groups support their affiliates to maintain
their reputation. |
| URI: | http://hdl.handle.net/2451/26310 |
| Appears in Collections: | Finance Working Papers
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