IPO Study in India

Description

This study investigates whether financial performance of non-financial firms in India improves systematically before going public and whether such enhancement continues after the firms go public. H1: Firms exhibit statistically significant improvement in Return on Assets (ROA) in the year immediately preceding the IPO (T−1 versus T−2). H2: Post-IPO profitability (ROA) declines relative to the pre-IPO peak (T+1, T+2, T+3 versus T−1). H3: EBITDA margins improve significantly in the pre-IPO year (T−1 versus T−2). H4: EBITDA margins decline after IPO listing (T+1, T+2 versus T−1). H5: Revenue growth accelerates in the pre-IPO period (T−1 versus T−2). H6: Discretionary accruals (estimated via the Modified Jones Model) are significantly positive in the pre-IPO period (T−1 and T0), indicating upward earnings manipulation. H6 is therefore framed as a directional null hypothesis of no systematic upward accrual management: rejection of the null would indicate manipulation, whereas failure to reject is consistent with the timing hypothesis. H7: Post-IPO earnings quality (OCF/Net Profit) deteriorates relative to the pre-IPO level (T+1 versus T−1). H8: The magnitude and direction of post-IPO performance effects vary systematically across IPO cohorts, reflecting differential leverage profiles and market conditions.

Institutions

• Parul University

  Gujarat, Vadodara

Categories

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