Institutional Preference for Firm Attributes: Evidence from India

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 p...

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Bibliographic Details
Published inThe ICFAI journal of applied finance Vol. 19; no. 2; p. 27
Main Authors Deb, Soumya G, Banerjee, Prithviraj S, Banerjee, Pradip
Format Journal Article
LanguageEnglish
Published Hyderabad IUP Publications 01.04.2013
Subjects
Accounting
Asset allocation
Bias
Capital expenditures
Corporate governance
Emerging markets
Equity
Institutional investments
Investment policy
Mutual funds
New stock market listings
Portfolio investments
Preferences
Securities markets
Stock exchanges
Studies
Volatility
India
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Summary: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. [PUBLICATION ABSTRACT]
ISSN:0972-5105