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|Title: ||Group Affiliation and the Performance of Initial Public Offerings in the
Indian Stock Market|
|Authors: ||Subrahmanyam, Marti|
|Issue Date: ||2-Feb-2009 |
|Series/Report no.: ||FIN-08-010|
|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
business group companies is higher than that of stand-alone companies.
Furthermore, we find that the long run performance of IPOs, in general,
is negative. We also find that Indian investors over-react to IPOs and
their over-reaction (proxied by the oversubscription rate) explains the
extent of underpricing.|
|Appears in Collections:||Finance Working Papers|
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