Institutional Preference for Firm Attributes: Evidence from India

The IUP Journal of Applied Finance, Vol. 19, No. 2, April 2013, pp. 27-44

Posted: 4 May 2013

See all articles by Pradip Banerjee

Pradip Banerjee

National Institute of Industrial Engineering

Soumya Guha Deb

Indian Institute of Management Sambalpur; Indian Institute of Management (IIM), Sambalpur

Date Written: May 3, 2013

Abstract

This paper examines the firm characteristics typically preferred by institutional investors before investing in a stock in the Indian equity market, and also explores the implications of such preferences in terms of their subsequent performance. We find that all institutional investors show strong preferences for larger market capitalization stocks, stocks with international exposure and stocks included in indices. However, their preferences for price, leverage, turnover and other parameters differ. We also find that the preferences of these institutional investors are dynamic in nature and vary over time. It is observed that such preferences exhibited by institutions do not translate into concrete performance as manifested by lack of predictive power of stock returns in the following quarter.

Suggested Citation

Banerjee, Pradip and Guha Deb, Soumya and Guha Deb, Soumya, Institutional Preference for Firm Attributes: Evidence from India (May 3, 2013). The IUP Journal of Applied Finance, Vol. 19, No. 2, April 2013, pp. 27-44, Available at SSRN: https://ssrn.com/abstract=2260195

Pradip Banerjee (Contact Author)

National Institute of Industrial Engineering ( email )

Vihar Lake
Powai
Mumbai, MA 400087
India

Soumya Guha Deb

Indian Institute of Management (IIM), Sambalpur ( email )

Burla, 768019
India

Indian Institute of Management Sambalpur ( email )

Sambalpur
Odisha
Sambalpur, Orissa 768019
India

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
438
PlumX Metrics