Bookbuilt IPOs in India: Evaluating the Impact of `Anchor Investors' and `IPO Grades', 2007 - 2011.
Abstract: The last five years (2007 - 2011) have been extremely unstable as
far as the Indian Equity Markets are concerned. This period has been one of the most
volatile with regards to the macro environment and has seen the introduction of two
significant policy changes for IPOs in India: `IPO Grading' and `Anchor Investors'. Through
this study, I evaluate both the impact of these policy ... read morechanges and of the macro volatility
on underpricing and investor response for bookbuilt IPOs in India. My findings suggest that
recent policy changes have failed to reduce ex-ante uncertainty and thus have had no impact
on IPO underpricing and although initially I find that both `IPO Grading' and `Anchor
Investors' elicit a positive and significant response from institutional investors, the
impact of Anchor Investors dissipated under Propensity Score Matching. The uninformed
investors have however failed to register any kind of response to `IPO Grading' or `Anchor
Investors'. I also find evidence that the investor confidence which evaporated during the
financial crisis of 2008 has still not recovered to pre-crisis levels.
Thesis (M.S.)--Tufts University, 2012.
Submitted to the Dept. of Economics.
Advisor: Edward Kutsoati.
Committee: Jeffrey Zabel, and Christopher McHugh.
Keywords: Economics, and Finance.read less