Signalling Models for the Valuation of IPO's: A pragmatic assessment of IPO's in India (2007)
Jajodia, Swati (2007) Signalling Models for the Valuation of IPO's: A pragmatic assessment of IPO's in India (2007). [Dissertation (University of Nottingham only)] (Unpublished)
This dissertation empirically tests the IPO signalling models including Leland and Pyle (1977)'s capital structure model, Bhattacharya (1979) and Heinkel (1978)'s dividend signalling model, Krinsky and Rotenberg (1989)'s firm risk model, Feltham, Hughes and Simunic (1991) signalling model and a new multivariate model based on the Indian IPO issuing market data. This study examines the relative importance of the signalling variables on the market value achieved by an Initial public offering (IPO). A sample of 60 Indian IPO's on the official list of the Indian Stock Exchange during the year 2007 indicates that the extent to which existing owners keep a stake in the business, the dividend policy of the firm, etc. have a significant impact on the performance of IPO. The regression results not only support the existing literature but also seek to understand an emerging pattern in the Indian IPO market with reference to the previous studies. It reveals that the other factors such as delay in listing, the debt to asset ratio, etc. also play a significant role in the valuation of IPO's. Moreover, it can be concluded that there are quite a few signals related to the firms in the IPO context and available to the investors, which could be used by them to assess the quality of firms.
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