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Relationship between the Changes in Ownership and Performance of Indian Firms around IPO: A Panel Data Analysis

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Author Info
Mayur, Manas
Kumar, Manoj
Mahakud, Jitendra

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Abstract

The study investigates the change in performance of Indian public firms post to their Initial Public Offerings (IPOs) and its relationship with the changes in the insiders’ ownership around the time firms do their IPOs. A three step methodology is followed. First, the pre-IPO performance of a sample of Indian publicly listed firms is compared with their post-IPO performance. Second, a univariate analysis is carried out wherein the median of post-IPO performance of sampled firms having low level of insiders’ ownership in the post-IPO period is compared with the median of post-IPO performance of sampled firms having high level of insiders’ ownership in the post-IPO period. Finally, multivariate analysis is done in form of a panel data regression model to assess the effect of changes in the insiders’ ownership around the time firms do their IPOs on the post-IPO performance of the firms. It is found that: (a) performance of entire sample of publicly listed Indian firms deteriorates significantly post to their IPOs; and (b) firms having low levels of insiders’ ownership in the post-IPO period experienced the greatest decrease in their post-IPO performance. It is concluded that the changes in the level of insiders’ ownership are inversely proportional to changes in performance of firms around the time firms do their IPOs.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6192.

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Date of creation: 2007
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Handle: RePEc:pra:mprapa:6192

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Related research
Keywords: Initial public offerings; emerging market; India; post IPO performance;

Find related papers by JEL classification:
G1 - Financial Economics - - General Financial Markets
G3 - Financial Economics - - Corporate Finance and Governance

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