CIA1 RM PRESENTATION.pptx rm cia 1 christ

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1. Research METHODOLOGY CIA-1

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3. BEHAVIOURAL BIAS IN IPO MARKET Majumdar Niarv , Joshi Dr Prashant and Dr Krishna Kant It has been observed that investors in the IPO market attempt to make superior profit in the short run. Hayat & Anwar, 2016 suggest not all investors are well versed in investment and possess poor financial literacy as well as financial prudence. Seawright, 2012 identified the 10 most common Behavioural Biases viz. confirmation bias, optimism bias, loss aversion, self-serving bias, the planning fallacy, choice paralysis, herding, preference to stories to analysis, recency bias, and blind spot bias. This study is based on Primary data. The data are collected through the Survey M ethod . The study proves that the investors show Behaviour Bias in their investment decisions in the IPO Market. Overall Investors exhibit Loss Aversion Bias, Stories to Facts Bias, Recency Bias, & Overconfidence Bias. While they are not biased for Confirmation, Self-Serving, Planning Fallacy, Choice Paralysis, Herding, Rule of Thumb and Disposition Effect.

4. IMPACT OF BEHAVIOURAL BIASES ON INVESTMENT DECISION TOWARDS IPOs P. Naresh Kumar and Dr. L. Balamuruhgan This study offers insightful knowledge regarding the stock market access habits of retail investors in India. This study's primary objective is to examine the impact of behavioral bias factors on Investment Decisions towards IPOs A sample design is a technique or procedure used by the researcher to choose elements for the sample. The sample design must be chosen by the YMER || researcher after considering the nature of the inquiry and other relevant criteria (Kothari C.R., 2004). The results of this descriptive study investigate how investors' biases affect their overall investing choices concerning initial public offerings. In addition, investor behaviour , heuristics, herding, and gambling bias factors each have a big impact on how investors decide which stocks to buy. 

5. AN ANALYSIS OF BEHAVIOURAL BIAS IN INVESTMENT Geetika Madaan and Sanjeet Singh This research study covered 4 different behavioural biases to complete the study. These behavioural biases are Overconfidence, Anchoring, Disposition effect, and Herding bias. The present study is a cross-sectional study and the Quantitative method is used for data analysis. A questionnaire was designed and a survey method was applied to obtain responses. The discipline of behavioural finance has emerged in response to handling the difficulties faced by the traditional finance discipline. In essence, behavioural finance explains that investment choices are not always influenced based on rationality. Behavioural finance also tried to understand the investment market anomalies by unwinding the two assumptions of standard finance, that is, ( i ) investors fail to update their beliefs precisely and (ii) there is a systematic variation from the normative process in making investment choices (Kishore, 2004).

6. DOES BEHAVIOURAL BIASES INFLUENCE INDIVIUAL INVESTMENT DECISIONS​ Aigbovo O and Iilaboya O.J This paper empirically investigates whether behavioural biases rather than the rationalism provided by the traditional finance theories play important role in shaping the investment decisions of individual investors in Nigeria. The study adopts a survey research design. The population of the study was based on all individual investors in Nigeria. ​ Major findings showed that individual investor decisions were not significantly related to representativeness bias, overconfidence/self-attribution bias, loss aversion and regret aversion bias. However, hindsight bias significantly influences individual investor decisions.

7. INFLUENCE OF SELECTED BEHAVIOURAL BIASES IN IPO MARKET by Amit Kumar Singh , Amiya Kumar Mohapatra , Mohit Kumar and Ankur Saxena This research study covered 4 different behavioural biases to complete the study. These behavioural biases are Overconfidence, Anchoring, Disposition effect, and Herding bias. The present study is a cross-sectional study and the Quantitative method is used for data analysis. A questionnaire was designed and a survey method was applied to obtain responses. The discipline of behavioural finance has emerged in response to handling the difficulties faced by the traditional finance discipline. In essence, behavioural finance explains that investment choices are not always influenced based on rationality. Behavioural finance also tried to understand the investment market anomalies by unwinding the two assumptions of standard finance, that is, ( i ) investors fail to update their beliefs precisely and (ii) there is a systematic variation from the normative process in making investment choices (Kishore, 2004).

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9. Investor Sentiment and Pre-IPO Markets Cornelli , F and et.al. (2004) have tried to investigate the what role does sentiments play in the pricing of stocks that are to be listed for the first time. A sample set of 486 companies that went public from November 1995 to December 2002 is taken. Grey market and IPO prices were correspondingly analyzed for each company. The data reveals there is an asymmetric relation between grey market prices and post-issue prices. Investor sentiment is a key factor that helps stocks to reach their fundamental values, however underwriters still consider investors to be biased in their view of the respective stock performance.

10. IPO Pricing and the Relative Importance of Investor Sentiment: Evidence from Germany Oehler , A and et.al. (2004) using both censored and uncensored data, the cross-sectional regression analysis demonstrates that investor sentiment and demand, rather than ex-ante uncertainty, had a greater impact on initial returns, particularly during the dot-com boom. The dataset used in this paper covers the period 1997-2001 and contains all initial listings on the Frankfurt Stock Exchange. Companies being traded nationally or internationally before going public on the Frankfurt Stock Exchange have been excluded. We conclude that, in times when a large degree of market optimism is present, underpricing is not primarily caused by ex-ante uncertainty; rather, the initial return is mostly determined by investor sentiment.

11. Investor Sentiment in the Stock Market Baker, M. and Wurgler , J. (2007) venture into providing theoretical predictions that try to analyze and interpret investor behavior in-order to accurately measure it. They create a sentiment index by aggregating multiple proxies and demonstrate its correlation with significant speculative events over the last four decades. It was concluded that in the future, the investor sentiment approach will need to tackle several tasks, such as defining and quantifying uninformed demand or investor sentiment, comprehending the underlying factors and how they change over time, and identifying which specific stocks draw speculators or have little room for arbitrage. Although there is still more work to be done in order to fully define this paradigm, there could be significant benefits to having a better grasp of investor mood.

12. Investor sentiment and IPO pricing during pre-market and aftermarket periods: Evidence from Hong Kong Li, J. and Li, G. (2013) have evaluated pre-market and aftermarket attitudes independently using a sample of 293 Hong Kong IPOs, and examine at how they drive IPO price using a two-stage methodology. They have chosen to utilize Chen and Wilhelm's (2008) two-stage approach to analyze the dynamics of investor sentiment as it moves from the pre-market to the aftermarket phases. While we examine the effect of sequentially arriving sentiment investors on IPO pricing, Chen and Wilhelm concentrate on the transition to account for the consecutive arrivals of educated traders. Underwriters take advantage of pre-market investor sentiment by raising the offer price so long as demand in the public tranche indicates it. It seems that pre-market demand for an IPO in a public tranche is driven by investor interest.

13. Individual Investor Sentiment and IPO Stock Returns: Evidence from the Korean Stock Market Chung, Y.C. and et.al. (2017) looks into the influence of individual investors’ pre-market and aftermarket sentiment on initial public offering (IPO) stock returns, based on 382 IPO companies in the Korean stock market between 2007 to 2014. This study indicates that a significant amount of the high early returns of IPO equities in the Korean IPO market can be attributed to the pre-market sentiment of individual investors.

14. KEY POINTS Investor sentiment is a key factor that drives pre-issue prices. Underwriters take advantage of positive investor sentiment. Investor behavior cannot be quantified in a fully comprehendible form. In period of positive sentiment among investors, demand for the IPO increases and vice-versa. Positive sentiment tends to reduce perceived risk, in contrast, during periods of low sentiment, investors may be more risk-averse and scrutinize IPOs more carefully. Thus, investor sentiment significantly influences the pricing, demand, and overall success of IPOs.

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16. IPO Underpricing, Issue Mechanisms, and Size BY T. P. Madhusoodanan 30th January, 2004 This essay examines IPO pricing in the Indian setting. The impact of Bookbuilding's introduction on IPO pricing is also investigated in this research. While underpricing of initial public offerings (IPOs) has been the subject of much research in developed markets, little has been done in the Indian context. Nearly all markets have documented instances of short-run underpricing (for a comparison of 25 nations, see Loughran et al., 1994).

17. Collateral Regulation and IPO‐Specific Liberalisation by Stavros Thomadakis This study employs a novel testing ground to examine how price constraints affect initial returns and IPO pricing. The Athens Stock Exchange provides the setting for this novel experiment since, in just eight years, it underwent three significant revisions to its limit restrictions. The regulation of IPOs has a long history around the world and is linked to intrinsic informational asymmetries that surround new listings (Chan et al., 2004; Chambers and Dimson, 2009; Carpentier et al., 2012; Ekkayokkaya and Pegniti , 2012; Burhop et al., 2014).

18. Deliberate premarket underpricing and aftermarket mispricing: New insights on IPO pricing by Beat Reber Using Stochastic Frontier Analysis, we break down initial returns into intentional premarket underpricing and aftermarket mispricing. We describe intentional underpricing as a function of market participants' proxies for the information asymmetry surrounding IPO value. By purposefully underpricing the IPO, equity held is an improbable signaling strategy to communicate IPO value to outside investors.

19. determines IPO underpricing by Ben Slama Several empirical studies documented the existence of the initial underpricing phenomenon for newly listed firms during the early days of trading across many countries and capital markets. Early studies examined the performance of IPOs on the US market. Ibbotson (1975) find an average abnormal return of 11.4. Loughran and Ritter (1995) based on their survey of papers on the IPO underpricing report average initial returns of 10.0 per cent. More recently, Purnanandam and Swaminathan (2004) find returns ranging from 14.0 to 50.0 per cent depending on the matching criteria used.

20. Underpricing of Initial Public Offerings by Supriya Katti The intricacy of determining the price of products and services increases with demand unpredictability. Due to differing perceptions of the worth of specific goods and services, the provider would also be compelled to undercut the price of the goods or services in order to meet the deadline.

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22. Media sentiment and IPO under pricing By - Emanuele Bajo and Carlo Raimondo (2016) They have published about how the media sentiment influences IPO’s and that positive tones are positively associated with IPO under pricing using a sample of s 2814 IPOs and 27,309 articles published in U.S. newspapers in the period 1995–2013 and ASCII- encoded segments (i.e. pdf's, jpg's), HTML, and XBRL methods are used. The paper showcases how media presents the information can influence and manipulate the retail investor's belief and then cause an impact on the investor's behave towards an IPO. The authors also showcase the positive association with investors when an is undervalued or under price.

23. The Impact of Investor Sentiment on IPO Under-pricing By - Beiyi Chen, et.al (2021) They have described In this paper, the comprehensive index CICSI to introduced to represent investor sentiment and iPO under-pricing . Taking a sample size 2,955 A-share listed stocks from 2003 to 2020 in the Chinese stock market. The paper also uses an econometric regression model to conduct the empirical test. The research shows that investor sentiment has a significant promoting effect on IPO under-pricing. Investors with optimistic investment sentiment tend to expect the price of IPO stocks to be much higher than the issue price.  

24. Investor Sentiment and Pre-Issue Markets By - Francesca Cornelli , et.ai (2004) The Authors have made an empirical model to distinguish between sentiment and rational pricing behaviour and test for the rationality of small investors and demand for new stock issues using data from pre-issue or grey markets in Europe. When small investors are excessively optimistic, they are willing to pay a price above the fundamental value, resulting in a high aftermarket price. When they are pessimistic, and value the shares below the fundamental value, they will be priced out of the market  

25. Exploring the Influence of Investor Sentiment on IPO Underpricing of Technology Companies By - M. Schulte M. Schulte has used, a sample with high quality data availability, consisting of 245 technology company IPOs from US stock exchanges during the time of 2010-2018. The research paper gives insight about The hypothesis of whether IPO under pricing has a relationship with investor sentiment in technology companies to which the Investor sentiment has a (positive) relationship with IPO underpricing of technology companies.

26. Shariah vs non-shariah IPO underpricing: evidence from Indonesia Stock Exchange By - Syafiq Mahmadah Hanafi and Mamduh M. Hanafi (2022) They investigated the effect of shariah status on IPO under-pricing using the Indonesian stock market performance of shariah and non-shariah IPOs and find that both shariah and non-shariah IPOs underperform the benchmark, as shown in the Fama –French three-factor regressions. Shariah IPOs underperform non-shariah IPOs and investigate the relationship between short and long-term performance of Shariah IPO’s. The Information was sourced by using open and closing prices from around 450 Indonesia IPOs from 1990 to 2018. We also collect information on fundamentals such as total assets, percentage of IPOs the data was taken from the Indonesian stock exchanges.  

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28. Herd Behaviour and Capital market Sagar Varshney , Dr. T. Gurusant , Prof. Kanhaiya Singh (2020) describe the overview of the existing literature on herding behaviour in capital markets. Incorporating more specific details, comparisons, theoretical grounding, and future research directions will further strengthen the review's depth, clarity, and impact.

29. STRUCTURAL REVIEWS OF INITIAL PUBLIC OFFERINGS: A PATH AHEAD Sushila Soriya and Ashok Kumar Meena (2019) describe how they provides a valuable resource for understanding the current state of research on IPOs and identifying potential avenues for future investigation. By building upon the existing knowledge base and exploring new theoretical and methodological approaches, researchers can contribute to a deeper understanding of IPO performance and its implications for various stakeholders.

30. Herd Behaviour: How Decisive is the Noise in the NSE and BSE Stock Markets Paritosh Chandra Sinha (2016) describes this paper provides valuable insights into how behavioral factors like herding and noise influence market behavior , challenging traditional finance theories and suggesting promising avenues for future research.

31. Investigating Investors' Herd Behavior Bhoomika Trehan and Amit Kumar Sinha (2019) describe the initial exploration of herding behavior among Indian investors. Expanding on the methodology, incorporating quantitative data analysis, and drawing connections to existing research and theory would significantly enrich the research and solidify its contribution to the field.

32. Transparency in IPO mechanism: Retail investors’ participation, IPO pricing and returns Suman Neupane and Sunil S. Poshakwale (2012) described in , this study that offers a valuable contribution to the understanding of bookbuilding mechanisms and their implications for different investor groups. It highlights the importance of transparency for empowering retail investors while also pointing to the need for further research on their decision-making processes and performance in IPOs.