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dc.contributor.authorWadhwa, Kavita
dc.contributor.authorSyamala, Sudhakara Reddy
dc.descriptionWadhwa, Kavita, Department of Finance, Indian Institute of Foreign Trade, New Delhi, India; Syamala, Sudhakara Reddy, Department of Finance and Control, Indian Institute of Management Calcutta, Kolkata, India
dc.descriptionISSN/ISBN - 17439132
dc.descriptionDOI - 10.1108/IJMF-06-2017-0106
dc.description.abstractPurpose: The purpose of this paper is to study the reallocation of initial public offering (IPO) shares to retail investors, non-institutional buyers (NIBs) and qualified institutional buyers (QIBs). The authors examine how the reallocation process is related to the pricing decision of the underwriter. The authors also examine the long-run performance of the IPOs classified on the basis of the highest reallocation by retail investors, NIBs and QIBs. Design/methodology/approach: The authors use regression analysis as well as 2SLS and three-stage least squares models to test the hypotheses. For long-run performance analysis, the authors adopt Carhart�s (1997) four-factor model. Findings: First, the authors provide evidence that the reallocation of IPO shares for retail investors, NIBs and QIBs is frequent. Second, all three categories of investors are treated differently in the reallocation of underpriced shares. Third, the authors find that the reallocation and pricing strategies are interdependent and both the strategies are used by the underwriter to reward and favor retail investors for showing high level of demand. The authors find that in India, underwriters reward retail investors. Lastly, even though underwriters favor retail investors for reallocation, the authors find that IPOs which receive highest reallocation to retail investors perform poorly in the long run. Originality/value: This paper is the first paper to show evidence of reallocation of IPO shares by underwriters for an emerging market. The paper is different from other papers as the regulatory regime present in the Indian markets is different from other markets. � 2018, Emerald Publishing Limited.
dc.publisherInternational Journal of Managerial Finance
dc.publisherEmerald Group Publishing Ltd.
dc.titleReallocation of IPO shares: emerging market evidence
Appears in Collections:Finance and Control

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