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From frenzy to flip: Unpacking foreign investor behavior in the wake of regulatory change

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  • Aneesha, M A
  • Lukose, P J Jijo

Abstract

This study investigates the effects of a regulatory change that enabled a new category of Foreign Portfolio Investors (FPIs) to participate in the Indian IPO market. We find a significant increase in FPI demand and their share in the total institutional holdings post-regulation. Further, we observe a significant rise in flipping activity accompanied by a decline in FPI holdings during the two quarters after an IPO. Despite these changes, the level of information uncertainty remains largely unchanged. These findings underscore regulatory interventions' complex and multifaceted consequences on FPI behavior and its broader implications for IPO market dynamics.

Suggested Citation

  • Aneesha, M A & Lukose, P J Jijo, 2025. "From frenzy to flip: Unpacking foreign investor behavior in the wake of regulatory change," Finance Research Letters, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:finlet:v:73:y:2025:i:c:s154461232401674x
    DOI: 10.1016/j.frl.2024.106645
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    More about this item

    Keywords

    IPO; Regulation; Foreign portfolio investors; Flipping; Information uncertainty;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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