Ownership and Performance in an Emerging Market: Evidence from Indian IPO Firms
-- Manas Mayur and Manoj Kumar
The study investigates the changes in the performance of Indian public firms post their Initial Public Offerings (IPOs) and
their relationship, if any, with the ownership retained by the insiders after IPOs. The pre-IPO performance of Indian public firms is
compared with their post-IPO performance. It was found that the performance of Indian public firms deteriorated significantly post
their IPOs. Furthermore, firms, wherein ownership retained by insiders post their IPOs is lowest, experienced the greatest decrease in
their post-IPO performance.
© 2009 IUP. All Rights Reserved.
Performance and Trading Characteristics of iShares:
An Evaluation
-- Gerasimos G Rompotis
This paper evaluates the performance and trading characteristics of Exchange Traded Funds (ETFs) using a sample of 73 iShares.
It also investigates the ability of iShares to accurately replicate the performance of their underlying indexes and finds that they fail to
do so. In addition, the study finds that this failure is greater for iShares tracking the international capital indexes of Morgan Stanley.
The results reveal that iShares trade at a premium to their net asset value. Considering the determinative factors of tracking error, the
study finds that it is strongly affected by expenses and risk and provides evidence that it is induced by the premium and the trading activity
of iShares. Premium is found to be positively affected by tracking error and negatively by volume. Further, regression analysis
indicates that the lagged premium is indicative of future return. The study also provides evidence that the volume is positively affected by
the intraday price volatility of iShares.
© 2009 IUP . All Rights Reserved.
An Empirical Examination
of Money Demand-Stock Prices Relationship
in Indonesia: Evidence from the Post-1997 Financial Turmoil
-- M Shabri Abd. Majid
This study adopts Cointegration approach and Granger causality analysis to empirically test the role of real stock prices in the
long-run money demand in the Indonesian economy for the period from the second quarter of 1998 to the fourth quarter of 2007. The
real narrow money (M1) is found to be cointegrated with the Real Gross Domestic Product (RGDP), 3-month Bank Indonesia
Certificate (BIC-3) rates and Real Stock Prices (RSP). This finding implies that there exists a long-run co-movement among these variables in
the Indonesian economy. The results also suggest that RSP has a positive and significant role in determining the long-run demand for
M1. In addition, RSP and M1 are found to have a bidirectional causality. This further implies that in designing economic policies
pertaining to the stock market, the Indonesian government through the Central Bank of Indonesia may also use money balance as opposed to
the current practice of adopting interest rates, as their monetary policy. On the contrary, controling the stability of money balance in
the long run can be achieved indirectly by regulating the stock market.
© 2009 IUP . All Rights Reserved.
Potential Dividends Versus Actual Cash Flows
in Firm Valuation
-- Carlo Alberto Magni and Ignacio Vélez-Pareja
Practitioners and a few academics use potential dividends rather than actual payments to shareholders for valuing a firm's equity.
The paper underlines the differences between the two methods and presents some arguments supporting the thesis that firm valuation
with potential dividends overstates the actual value of the firm's equity. In particular, consistent with DeAngelo and DeAngelo (2006
and 2007), the paper underlines that cash flows create value for shareholders only if they are withdrawn from the firm, and that the use
of potential dividends may lead to contradictions.
© 2009 IUP. All Rights Reserved.
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