Do Retail and Institutional Shareholding Data Reveal a Pattern in IPO Shares During Initial Years?

Abstract

The rich theoretical literature related to IPOs documents marked differences in the behaviour of institutional and retails investors. It is assumed that most of the times institutional investors possess both public and private information while retail investors possess only public information in the market place for trading. After the listing of IPO shares in the secondary market, whether the share holdings of institutional and retail investors exhibit any certain pattern become an interesting empirical question. Present paper attempts to address the same. It was found in the study that the factors attracting shareholdings of institutional and retail investors are different. There are two important factors which are defining institutional and retail shareholdings. They are: IPO offer Price and promoter holdings. While institutional holdings are positively related to IPO offer price and promoter holdings, the same variables are negatively related to retail holdings.