Determinants of Investor&rsquo;s Subscription Level of IPOs: Evidence from Indian Capital Market in Post Mandatory IPO Grading Regime

Souvik  Banerjee,; K.t.  Rangamani,

Determinants of Investor’s Subscription Level of IPOs: Evidence from Indian Capital Market in Post Mandatory IPO Grading Regime

Abstract:

This research paper determines the factors that influence investor’s appetite for Graded Initial Public Offerings (IPOs) between 2007 and 2013, in the context of Indian capital market. Company specific factors related to pre-issue financial position, corporate governance, and post issue promoter holding, firm age at the time of the issue, reputation of the lead manager of the issue, reputation of the credit rating agency, IPO Grade, and also market sentiment related factors like change in the money supply, Foreign Institutional Investor’s (FII) inflow, Price to Earnings (PE) ratio of the market, and market return, are considered. Out of these factors, FII Inflow, Market PE, Money Supply, Debt to Equity (DE) ratio, and board size of the companies have statistically significant impact on the investor’s interest in the IPOs in terms of subscription level. This is a significant addition to the existing literature.