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Determinants of Volume of IPOs in India: A Case of Count Model with Overdispersion

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  • Vikram Ghandeeswaran Narayanan

    (Sri Sathya Sai Institute of Higher Learning, Prasanthinilayam, Andhra Pradesh, India)

  • Gopakumar Kattiparambil Unni

    (Sri Sathya Sai Institute of Higher Learning, Prasanthinilayam, Andhra Pradesh, India)

Abstract

This study sets out to identify the factors determining Initial Public Offerings (IPO) in India. The sample for our study covers on a monthly frequency from April 2001 through December 2017. Where, volume of IPO, i.e., number of companies that have gone public is taken as the dependent variable and it is regressed on variables that capture the macroeconomic scenario as well as investor’s confidence. Having a count dependent variable, we have employed Poisson regression and negative binomial regression techniques to estimate the parameters. The results from our study confirms the significance of the chosen variables in determining IPOs in India. However, it is the role secondary market variables like stock returns, liquidity and volatility that stands out prominent among other factors like economic growth, interest rate, inflation, credit and FII’s. Apart from these conventional variables, we also find investor’s perception about businesses measured by business confidence index (BCI), to be an influential factor in determining the volume of IPOs.

Suggested Citation

  • Vikram Ghandeeswaran Narayanan & Gopakumar Kattiparambil Unni, 2021. "Determinants of Volume of IPOs in India: A Case of Count Model with Overdispersion," Economic Research Guardian, Weissberg Publishing, vol. 11(1), pages 27-46, June.
    • Handle: RePEc:wei:journl:v:11:y:2021:i:1:p:27-46
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    References listed on IDEAS

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    1. Malcolm Baker & Jeffrey Wurgler, 2007. "Investor Sentiment in the Stock Market," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 129-152, Spring.
    2. Rashid Ameer, 2012. "Macroeconomic Factors and Initial Public Offerings (IPOs) in Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 8(1), pages 41-67.
    3. James C. Brau & Bill Francis & Ninon Kohers, 2003. "The Choice of IPO versus Takeover: Empirical Evidence," The Journal of Business, University of Chicago Press, vol. 76(4), pages 583-612, October.
    4. Barry, Christopher B. & Muscarella, Chris J. & Peavy, John III & Vetsuypens, Michael R., 1990. "The role of venture capital in the creation of public companies*1: Evidence from the going-public process," Journal of Financial Economics, Elsevier, vol. 27(2), pages 447-471, October.
    5. Eliana Angelini & Matteo Foglia, 2018. "The Relationship Between IPO and Macroeconomics Factors: an Empirical Analysis from UK Market," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 319-336, May.
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    Cited by:

    1. Marcin Olkiewicz, 2022. "The Impact of Economic Indicators on the Evolution of Business Confidence during the COVID-19 Pandemic Period," Sustainability, MDPI, vol. 14(9), pages 1-17, April.

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    More about this item

    Keywords

    Initial Public Offering; Count Data; Poisson regression; Negative binomial regression; Business confidence index;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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