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Papers by Prof. Seshadev Sahoo

Research paper thumbnail of What drives corporate cash holdings in MSMEs?: Evidence from India

Managerial Finance

PurposeThis study investigates the factors affecting corporate cash holdings for a sample of 598 ... more PurposeThis study investigates the factors affecting corporate cash holdings for a sample of 598 Indian Micro, small and medium-sized enterprises (MSMEs) for nine years (2011–2020).Design/methodology/approachThe system generalized method of moments (GMM) approach is used to examine the determinants of cash holdings in the Indian MSME context.FindingsThe article shows liquidity, cash flow, leverage, firm size, probability of financial distress and cash flow volatility significant in explaining cash holding decisions for MSMEs in India. No evidence of firm age and growth opportunities as determinants of cash holdings in Indian MSMEs has been found. In addition, strong evidence of cash flow volatility, cash flow and liquidity in differentiating the cash holding decisions in the service and manufacturing industry has been documented.Originality/valueWhile earlier research has addressed this problem in developed nations, this is the first study that fulfills the need to investigate the v...

Research paper thumbnail of Do Analysts Become Better Forecasters Over Time: Evidence from India

International Journal of Indian Culture and Business Management

Research paper thumbnail of Do anchor investors affect long run performance? Evidence from Indian IPO markets

Pacific Accounting Review

Purpose Anchor investor (AI) regulation was introduced in 2009 by the Indian market regulator Sec... more Purpose Anchor investor (AI) regulation was introduced in 2009 by the Indian market regulator Securities and Exchange Board of India to facilitate the price discovery process during the book-building mechanism. This study aims to examine the aftermarket pricing performance of initial public offering (IPO) firms over the long-run period of up to 36 months after the listing date in the anchor investor regime. Design/methodology/approach The post-issue performance of 129 Indian IPOs issued from 2009 to 2014 is studied by using buy and hold abnormal returns, cumulative abnormal returns and wealth relatives approaches. This study presents the aftermarket performance indicators of Indian IPOs along with the comparative analysis between anchor-backed and non-anchor-backed IPO categories. Using multiple regression analysis, this study identifies the firm-level variables and issue characteristics that can explain long-term IPO performance. Findings This study reports that Indian IPOs continu...

Research paper thumbnail of Determinants of Intercorporate Investments: An Empirical Investigation of Indian Firms

International Journal of Financial Studies

We examine the determinants of intercorporate investments for a sample of 127 firms listed in the... more We examine the determinants of intercorporate investments for a sample of 127 firms listed in the National Stock Exchange (NSE) in India for the period 2015–2019. This research indicates that the investor firm’s intercorporate investments are influenced by free cash flows, dividend yield, promoter holding, and leverage. Interestingly, contrary to anecdotes in the financial press, the investor firms where promoter holding (equity) is more, prefer to invest less in the other firm’s capital (as part of intercorporate investment). Using OLS regression, this analysis does not find evidence for the variables, that is, the firm’s age, the capital expenditure required, growth in earnings per share, board independence, and CEO duality for significant influence on intercorporate investments. Further tests for industry effect reveal the consumer and retail sector’s intercorporate investments to be significantly different (i.e., lower) from the manufacturing and service sectors.

Research paper thumbnail of What Drives Derivatives: An Indian Perspective

Journal of Risk and Financial Management

This study investigates the determinants for the use of derivatives by firms in the Indian market... more This study investigates the determinants for the use of derivatives by firms in the Indian market. Using a sample of 433 firms listed in the National Stock Exchange (NSE) in India for the period 2013–2018, we find that firm size, debt to equity, turnover, price–earnings ratio and the magnitude of international transactions are significant influential drivers responsible for pushing the firm to use derivatives for risk management. The findings also document that the financial distress of the firm, which is one of the important reasons for the use of derivatives in advanced economies, happens to be insignificant when it comes to developing countries like India. Using logistic regression, it is observed that highly levered firms condense the use of derivatives as part of a financial risk management strategy, which contradicts existing literature. All other findings are generally consistent with the theory of derivatives as well as with international evidence.

Research paper thumbnail of Do anchor investors create value for initial public offerings? An empirical investigation

Research paper thumbnail of Signalling by IPO grading: an empirical investigation

Afro-Asian J. of Finance and Accounting, 2016

Research paper thumbnail of Syndicate Size, Structure and Performance: An Empirical Investigation of Indian IPOs

Research paper thumbnail of Valuation of Fixed Price Offers: An IPO Perspective

The Iup Journal of Financial Economics, Oct 3, 2012

Research paper thumbnail of Determinants of lapsation of life insurance policies: an empirical investigation for the Indian market

International Journal of Financial Services Management, 2015

Research paper thumbnail of Do analyst's pre-issue recommendation create value? Empirical evidence from Indian IPO market

The Spanish Review of Financial Economics, 2014

Research paper thumbnail of How do investors' subscription rate and pattern affect underpricing? An empirical investigation for Indian IPOs

Afro-Asian J. of Finance and Accounting, 2014

Research paper thumbnail of Determinants of Pricing IPOs: An Empirical Investigation

South Asian Journal of Management, Oct 1, 2012

Research paper thumbnail of Risk Proxies and IPO Underpricing: An Empirical Investigation

This paper is motivated by the apparent belief that risk and uncertainty surrounding an Initial P... more This paper is motivated by the apparent belief that risk and uncertainty surrounding an Initial Public Offering (IPO) have significant impact on underpricing. IPOs are underpriced on initial day to compensate for the risk inherent in it. While a list of risk proxies are suggested in literature, it actually invokes several complications in selecting the suitable risk for an IPO. Using the magnitude of underpricing as risk premium for initial investors, this paper seeks to shed light on the controversy by taking a sample of 171 IPOs issued in India during 2002-2007. Suitability of risk surrogates is examined to estimate underpricing. The findings revealed that high price deflated to low price (H/L) has a superior estimation power for underprice, suggesting H/L as a better indicator for uncertainty surrounding IPOs rather than other risk surrogates used in this study. Besides H/L, it is the investment bank prestige and inverse of offer proceeds which proved to be statistically signific...

Research paper thumbnail of Comparable firm’s P/E multiple and IPO valuation: an empirical investigation for Indian IPOs

DECISION, 2013

ABSTRACT We examine the influence of the comparable P/E (selected on different parameters, i.e., ... more ABSTRACT We examine the influence of the comparable P/E (selected on different parameters, i.e., industry, revenue characteristics, book value, and return on net worth) on IPO pricing. The sample comprises of 120 IPOs issued in India during the period 2002–2007. We find that the comparable P/E chosen on the basis of industry alone shows poor estimation power. However, significant improvement in the estimation power of the comparable P/E approach is observed while tapering down the list of comparable firms from the identical industry (affiliating IPO firm) on the basis of revenue characteristics, book value, and return on net worth. We suggest that comparable firms selected from identical industry further adjusted with revenue characteristics and return on net worth provide the most efficient P/E multiple for evaluating IPO price. This paper also finds that IPO price estimated by multiplying current EPS of the IPO firm with benchmark peer group average P/E is positively associated with both offer price and list price, suggesting that higher value can be expected for IPOs relating to high-valued peer group and vice versa. Valuations tend to be more accurate (adjusted R 2 = 77.5 %), when the price is estimated on the basis of comparable peer group P/E along with a set of financial information. The offer price and list price are found positively and significantly influenced by the financial information, i.e., book value, growth and risk along with peer group P/E.

Research paper thumbnail of Post-issue promoter groups holding, signalling and IPO underprice: evidence from Indian IPOs

International Journal of Financial Services Management, 2010

Prestige and reputation of investment banks play an important role in the success of an IPO. The ... more Prestige and reputation of investment banks play an important role in the success of an IPO. The paper attempts to assign quantitative value to the prestige of investment banks and also empirically test whether reputation of investment banks influence the magnitude of underpricing. This paper also explores the relation among syndicate size, offer size, post issue promoter(s) holdings, issue price and the age of the firm with investment banks prestige. This paper finds an inverse relationship between the prestige of the bank and the initial return of the new issue. That is, prestigious investment banks underprice less, than their less prestigious counterparts. This paper also document the strong association of the high rank investment banks with issue specific fundamental attributes (signalling variables) i.e. offer size, maturity or age of the issuing firm, syndicate size and the post issue promoter holding. Prestigious banks are found to manage issues with the help of more number of syndicate members than less-prestigious counterparts. Prestigious investment banks tend to manage the issues, where the risk content is at minimum. We document that the prestigious banks do not assume the risk of an unsuccessful issue, but instead transfer the risk to the issuer by underpricing the IPO substantially higher than prestigious banks.

Research paper thumbnail of After Market Pricing Performance of Initial Public Offerings (IPOs): Indian IPO Market 2002-2006

VIKALPA, 2010

This paper is motivated by the apparent belief that IPOs are underpriced on the initial listing d... more This paper is motivated by the apparent belief that IPOs are underpriced on the initial listing day and thereafter underperforms compared to the market benchmark. While evaluation of the listing day performance seems straightforward on surface, it actually invokes several ...

Research paper thumbnail of What drives corporate cash holdings in MSMEs?: Evidence from India

Managerial Finance

PurposeThis study investigates the factors affecting corporate cash holdings for a sample of 598 ... more PurposeThis study investigates the factors affecting corporate cash holdings for a sample of 598 Indian Micro, small and medium-sized enterprises (MSMEs) for nine years (2011–2020).Design/methodology/approachThe system generalized method of moments (GMM) approach is used to examine the determinants of cash holdings in the Indian MSME context.FindingsThe article shows liquidity, cash flow, leverage, firm size, probability of financial distress and cash flow volatility significant in explaining cash holding decisions for MSMEs in India. No evidence of firm age and growth opportunities as determinants of cash holdings in Indian MSMEs has been found. In addition, strong evidence of cash flow volatility, cash flow and liquidity in differentiating the cash holding decisions in the service and manufacturing industry has been documented.Originality/valueWhile earlier research has addressed this problem in developed nations, this is the first study that fulfills the need to investigate the v...

Research paper thumbnail of Do Analysts Become Better Forecasters Over Time: Evidence from India

International Journal of Indian Culture and Business Management

Research paper thumbnail of Do anchor investors affect long run performance? Evidence from Indian IPO markets

Pacific Accounting Review

Purpose Anchor investor (AI) regulation was introduced in 2009 by the Indian market regulator Sec... more Purpose Anchor investor (AI) regulation was introduced in 2009 by the Indian market regulator Securities and Exchange Board of India to facilitate the price discovery process during the book-building mechanism. This study aims to examine the aftermarket pricing performance of initial public offering (IPO) firms over the long-run period of up to 36 months after the listing date in the anchor investor regime. Design/methodology/approach The post-issue performance of 129 Indian IPOs issued from 2009 to 2014 is studied by using buy and hold abnormal returns, cumulative abnormal returns and wealth relatives approaches. This study presents the aftermarket performance indicators of Indian IPOs along with the comparative analysis between anchor-backed and non-anchor-backed IPO categories. Using multiple regression analysis, this study identifies the firm-level variables and issue characteristics that can explain long-term IPO performance. Findings This study reports that Indian IPOs continu...

Research paper thumbnail of Determinants of Intercorporate Investments: An Empirical Investigation of Indian Firms

International Journal of Financial Studies

We examine the determinants of intercorporate investments for a sample of 127 firms listed in the... more We examine the determinants of intercorporate investments for a sample of 127 firms listed in the National Stock Exchange (NSE) in India for the period 2015–2019. This research indicates that the investor firm’s intercorporate investments are influenced by free cash flows, dividend yield, promoter holding, and leverage. Interestingly, contrary to anecdotes in the financial press, the investor firms where promoter holding (equity) is more, prefer to invest less in the other firm’s capital (as part of intercorporate investment). Using OLS regression, this analysis does not find evidence for the variables, that is, the firm’s age, the capital expenditure required, growth in earnings per share, board independence, and CEO duality for significant influence on intercorporate investments. Further tests for industry effect reveal the consumer and retail sector’s intercorporate investments to be significantly different (i.e., lower) from the manufacturing and service sectors.

Research paper thumbnail of What Drives Derivatives: An Indian Perspective

Journal of Risk and Financial Management

This study investigates the determinants for the use of derivatives by firms in the Indian market... more This study investigates the determinants for the use of derivatives by firms in the Indian market. Using a sample of 433 firms listed in the National Stock Exchange (NSE) in India for the period 2013–2018, we find that firm size, debt to equity, turnover, price–earnings ratio and the magnitude of international transactions are significant influential drivers responsible for pushing the firm to use derivatives for risk management. The findings also document that the financial distress of the firm, which is one of the important reasons for the use of derivatives in advanced economies, happens to be insignificant when it comes to developing countries like India. Using logistic regression, it is observed that highly levered firms condense the use of derivatives as part of a financial risk management strategy, which contradicts existing literature. All other findings are generally consistent with the theory of derivatives as well as with international evidence.

Research paper thumbnail of Do anchor investors create value for initial public offerings? An empirical investigation

Research paper thumbnail of Signalling by IPO grading: an empirical investigation

Afro-Asian J. of Finance and Accounting, 2016

Research paper thumbnail of Syndicate Size, Structure and Performance: An Empirical Investigation of Indian IPOs

Research paper thumbnail of Valuation of Fixed Price Offers: An IPO Perspective

The Iup Journal of Financial Economics, Oct 3, 2012

Research paper thumbnail of Determinants of lapsation of life insurance policies: an empirical investigation for the Indian market

International Journal of Financial Services Management, 2015

Research paper thumbnail of Do analyst's pre-issue recommendation create value? Empirical evidence from Indian IPO market

The Spanish Review of Financial Economics, 2014

Research paper thumbnail of How do investors' subscription rate and pattern affect underpricing? An empirical investigation for Indian IPOs

Afro-Asian J. of Finance and Accounting, 2014

Research paper thumbnail of Determinants of Pricing IPOs: An Empirical Investigation

South Asian Journal of Management, Oct 1, 2012

Research paper thumbnail of Risk Proxies and IPO Underpricing: An Empirical Investigation

This paper is motivated by the apparent belief that risk and uncertainty surrounding an Initial P... more This paper is motivated by the apparent belief that risk and uncertainty surrounding an Initial Public Offering (IPO) have significant impact on underpricing. IPOs are underpriced on initial day to compensate for the risk inherent in it. While a list of risk proxies are suggested in literature, it actually invokes several complications in selecting the suitable risk for an IPO. Using the magnitude of underpricing as risk premium for initial investors, this paper seeks to shed light on the controversy by taking a sample of 171 IPOs issued in India during 2002-2007. Suitability of risk surrogates is examined to estimate underpricing. The findings revealed that high price deflated to low price (H/L) has a superior estimation power for underprice, suggesting H/L as a better indicator for uncertainty surrounding IPOs rather than other risk surrogates used in this study. Besides H/L, it is the investment bank prestige and inverse of offer proceeds which proved to be statistically signific...

Research paper thumbnail of Comparable firm’s P/E multiple and IPO valuation: an empirical investigation for Indian IPOs

DECISION, 2013

ABSTRACT We examine the influence of the comparable P/E (selected on different parameters, i.e., ... more ABSTRACT We examine the influence of the comparable P/E (selected on different parameters, i.e., industry, revenue characteristics, book value, and return on net worth) on IPO pricing. The sample comprises of 120 IPOs issued in India during the period 2002–2007. We find that the comparable P/E chosen on the basis of industry alone shows poor estimation power. However, significant improvement in the estimation power of the comparable P/E approach is observed while tapering down the list of comparable firms from the identical industry (affiliating IPO firm) on the basis of revenue characteristics, book value, and return on net worth. We suggest that comparable firms selected from identical industry further adjusted with revenue characteristics and return on net worth provide the most efficient P/E multiple for evaluating IPO price. This paper also finds that IPO price estimated by multiplying current EPS of the IPO firm with benchmark peer group average P/E is positively associated with both offer price and list price, suggesting that higher value can be expected for IPOs relating to high-valued peer group and vice versa. Valuations tend to be more accurate (adjusted R 2 = 77.5 %), when the price is estimated on the basis of comparable peer group P/E along with a set of financial information. The offer price and list price are found positively and significantly influenced by the financial information, i.e., book value, growth and risk along with peer group P/E.

Research paper thumbnail of Post-issue promoter groups holding, signalling and IPO underprice: evidence from Indian IPOs

International Journal of Financial Services Management, 2010

Prestige and reputation of investment banks play an important role in the success of an IPO. The ... more Prestige and reputation of investment banks play an important role in the success of an IPO. The paper attempts to assign quantitative value to the prestige of investment banks and also empirically test whether reputation of investment banks influence the magnitude of underpricing. This paper also explores the relation among syndicate size, offer size, post issue promoter(s) holdings, issue price and the age of the firm with investment banks prestige. This paper finds an inverse relationship between the prestige of the bank and the initial return of the new issue. That is, prestigious investment banks underprice less, than their less prestigious counterparts. This paper also document the strong association of the high rank investment banks with issue specific fundamental attributes (signalling variables) i.e. offer size, maturity or age of the issuing firm, syndicate size and the post issue promoter holding. Prestigious banks are found to manage issues with the help of more number of syndicate members than less-prestigious counterparts. Prestigious investment banks tend to manage the issues, where the risk content is at minimum. We document that the prestigious banks do not assume the risk of an unsuccessful issue, but instead transfer the risk to the issuer by underpricing the IPO substantially higher than prestigious banks.

Research paper thumbnail of After Market Pricing Performance of Initial Public Offerings (IPOs): Indian IPO Market 2002-2006

VIKALPA, 2010

This paper is motivated by the apparent belief that IPOs are underpriced on the initial listing d... more This paper is motivated by the apparent belief that IPOs are underpriced on the initial listing day and thereafter underperforms compared to the market benchmark. While evaluation of the listing day performance seems straightforward on surface, it actually invokes several ...