Review of Litem rature

7/29/2019 Review of Litem rature

1/21

34

CHAPTER- II

REVIEW OF LITERATUREA number of studies have been conducted from time to time to understand thedifferent aspects relating to primary market and merchant banking activities in India.

However, most of them have focused upon the primary market in India only. Researchin the area of merchant banking in India and its role in the primary market is verylimited and that too is descriptive in nature and deals with procedural aspects,organization and management and marketing aspects of merchant bankers. A reviewof important studies is presented below:

2.1 Literature SurveyVerma (1990)1 conducted research on merchant banks in India with the purpose toanalyse their organization structure and management pattern and to assess theirsuitability for medium and small size corporate and non corporate enterprises. Thesuitability of merchant banking services in reducing investors risk and corporatecapital structure has also been examined. The information was collected from a

sample of 32 merchant bankers through questionnaire and the study covered theperiod 1978 to 1984.The researcher found a number of weaknesses in the existing divisional formorganization and management pattern of merchant banks in India. This included deepconcentration of decision making power, lack of co-ordination, lack of appropriateskill, inadequate training programme, strict dependence on the bureaucraticframework, blocked communication channels and misdirected accountability.The study revealed that 90 percent of the resources of all merchant banks weredevoted only to the management of public issues. A negligible performance ofmerchant banks was found in other areas of services including loan syndication,merger and amalgamation, inter corporate investments and corporate counselling.

Further, merchant banking activities were found to have remained concentrated withonly a few top merchant bankers, while stock brokers managed very small sizedissues covering just 15% of the total amount of public issues.A good public response was found to the issues managed by category Imerchant bankers including merchant bankers of public sector banks, whereas the35category II merchant bankers which included private firms had the public response ofsecond order.The researcher highlighted the merchant banks contribution in causing riskreduction both to investors (through portfolio management) as well as the industry(through project counseling and corporate counseling). Empirical results also

highlighted that corporate enterprises which sought merchant bankers assistance werefinancially sounder and less prone to sickness as compared to those not assisted by themerchant banks.Murthy (1993)2 in his paper examined the cost of raising capital from the publicissues floated during 1992-93. During 1992-93, an amount of Rs. 4677.74 crore wasraised through 514 public issues. The estimated expenses on these issues were Rs.473 crore. Analysis of 506 public issues showed that issue expenditure as percentageof net public offer was 10.10% and the proportion of issue expenses declined with the


2/21

increase in offer size. The study found that smaller projects tend to spend a higherproportion as issue expenditure compared to the larger ones. The researcher alsocompared the cost of raising capital of issues through the OTC (over the counter)route and regular stock exchange option and found that the cost of raising capitalthrough OTC route was lower than the issues that opted for regular stock exchange

route.The study pointed out that no uniform format existed for reporting the issueexpenditure in the prospectus. The researcher has suggested that the total issueexpenditure as percentage to the total issue amount be reported prominently in theprospectus and abridged prospectus cum application form.Shah (1995)3 conducted an empirical study on the data set of 2056 Indian IPOs listedon the BSE from January 1991 to May 1995 with the objective to examine the underpricing of IPOs and to establish the empirical regularities about Indias IPO market.He examined six factors underlying under pricing, namely asymmetric informationbetween firms and investors, fixing the offer price too early, the interest rate float, lossof liquidity on the amount paid at issue date (liquidity premium), building loyal

shareholders and merchant bankers rewarding favoured clients as an incentive tounder price.Empirical study found that the average price on first listing day was 105.6%above the offer size, average delay between issue dates and listing day was 11 weeks36and weekly excess return on market index (BSE Sensex) was 3.8%. The study furtherfound that correlation between the volume of IPOs under pricing and the return onBSE Sensex was positive, under pricing among the smaller issues was high, averagelong run trading frequency of IPO was lower than A group companies and return onIPOs during the first 200 trading days was more than market return.Srivastava (1995)4 in his paper highlighted the need for efficient marketing of publicissues because of the transformation of new issue market from sellers market to buyerdominated market as the geographical and demographical range of investors haswidened. According to him, the process of public issue marketing starts with theselection of the issue by the merchant banker. Then the merchant banker plays the roleof a guide for the appointment of underwriters, brokers and an expert advertisingagency. The researcher has listed the current practices in public issue marketing whichinclude the application of data base marketing research, direct approach to investors (like insurance, UTI ), seeking services of marketing experts as issue specialists,branding the issues like mutual funds, and effective advertising through extensive andintensive use of media. The author concluded that the future dimensions of publicissue marketing will include the after sale service to investors and giving instantservices of selling.Aggarwal (1995)5 traced the origin, growth and history of merchant banking in Indiaand abroad. The objectives of the study included the analysis of organizationalstructure, management pattern and performance evaluation of SEBI registeredcategory I merchant bankers during the period 1989- 90 to 1993-94.The study found that merchant banking institutions lack skill developmentprogrammes for training the staff, up to date information and more concentration ofdecision making power. Despite this, the study highlighted the important role of


3/21

merchant bankers in the growth of capital market and mobilization of resources frompublic through issue management activities. The author recommended for stoppingthe turnover of personnel in merchant banking divisions of nationalized banks due totransfers, who have up to date market information and adopt professional attitude forproviding services as merchant bankers.

Narta (1996)6 conducted a research study to find out the growth of new issue marketand underwriting of capital issues in India, and to analyse the cost of raising capitalduring the period 1970-71 to 1988-89. The study was based on the secondary data.37The researcher found that after independence, a large number of publicfinancial institutions, investment institutions, merchant banking divisions ofcommercial banks and investment consultancy agencies were engaged in theunderwriting operations of capital issues in India.The researcher found that public financial institutions accounted for a largerproportion in underwriting activities though their share declined from 63% in 1970-71 to 22.64 % in 1986-87. The commercial banks showed an increase in underwriting

activities on account of opening of merchant banking divisions. Development banksand GIC were found to prefer participation in the underwriting of large issues. Stockbrokers were more active in underwriting during boom conditions while commercialbanks were more selective to underwrite the issues of their valued customers. Theaverage cost of public issues during the period of study was found to be ranging from8% to 10% of the amount offered to public. However, the cost of issues of existingcompanies was higher as compared to IPOs because of aggressive campaign for oversubscription.The suggestions by the researcher included opening of more merchant bankingdivisions by commercial banks, joint underwriting, single window agency in newissue market and priority to the underwriting of small issues by public financialinstitutions.Kailani (1998)7 in her research work examined the marketing strategies andperformance of merchant bankers during the period 1990-91 to 1997-98. The studywas based upon 77 merchant bankers.The researcher evaluated the performance of merchant bankers by taking intoaccount of both qualitative and quantitative dimensions. While qualitative factorsincluded skill in issue management and quality of personnel and services to theclients, the quantitative factors included number and amount of public issue handledand the activity profile of merchant bankers (fund based or non fund based). Thevariables taken for quantitative evaluation included projected and actual sales, profitbefore interest, depreciation and taxes, profit after tax and earnings per share.The study found that the role of merchant bankers had become more diverseafter the setting up of SEBI. Post liberalization era up to 1995 saw a number of smallfinancial companies entering into merchant banking business because of low entrybarriers. Consequently, bad quality issues were sold in large numbers. Further, high38concentration of merchant banking business was found among the top ten merchantbankers and only six merchant bankers provided all the post issue services. The authorrecommended for fixing the responsibility for fulfillment of promises made in the


4/21

prospectus, improving the quality of disclosures in IPOs, need for grading theprospectus, mandatory participation of merchant bankers in the project and rating ofmerchant bankers.Qumar (1998)8 analyzed the non fund based financial services by the leading publicsector banks (PSBs) in the field of merchant banking for the period 1993-94 to 1997-

98. According to the author, the public sector banks entered in merchant bankingbusiness on the recommendations of Banking Commission 1972 and dilution offoreign equity of large number of foreign companies operating in India. He analyzedthe role played by public sector banks in handling the number and amount of issues aslead manager, co manager, underwriter, adviser, banker to issue and the projectappraiser.The author concluded that there should be reforms in the existing legal systemrelating to financial services of PSBs, as frequent changes in guidelines had adverselyaffected the financial services of PSBs. The author pointed out that limited range ofmerchant banking activities, inferior quality of services and lack of trained and skilledpersonnel were the reasons for declining trend in the merchant banking business with

public sector banks and suggested a close touch with the economy and developmentsin capital market and more competitive and technical bank officers for improvementin the merchant banking services by banks.Mohiadeen (1999)9 conducted research on the topic A study on New IssueManagement Services of Lead Merchant Bankers in India. The objectives of thestudy included identifying the functional activities of issue management and to assessthe functioning of the merchant bankers in the pre and post issue management phases.The study covered the period from the year 1992-93 to 1996-97 and was based onboth primary and secondary data. The primary data was collected from a sample of 26lead merchant bankers a questionnaire.The study found that all private merchant bankers depended on the services ofthe brokers, sub brokers and underwriters for the success of the issue but merchantbanks of private and public sector banks did not depend on them. The merchant banksof nationalized banks and financial institutions had been rather concentrating only on39specific industries. Promoters track record, company fundamentals, industry type andEPS were the important factors in pricing the public issues. The market support ofbrokers was found to be inadequate. Collecting bankers to the issue were found tohave acquired the applications money even after closure of the issue. The performanceof the group lead merchant bankers who had handled the issues did not differsignificantly from those who had handled the issues individually. Lead merchantbankers opined that actual public issue cost had been more than the cost mentioned inthe offer document. The correlation of issue price and market price in the case ofpublic sector merchant bankers was found to be highly positive, but negative in caseof public issues managed by private sector merchant bankers. The researcherrecommended that the merchant bankers should develop a large public investors base for the development of equity culture in India and that there was a need for reductionin the number of merchant bankers in the industry.Guner (1999)10 in his paper analysed the relationship between underwriter (leadmanager)s reputation and IPO under pricing in the Istanbul Stock Exchange (ISE) in


5/21

Turkey. The authors attempted to compare the findings of various studies on USmarket that the IPOs managed by prestigious underwriters resulted in lower amount ofunder pricing in short period, with that of emerging markets.The sample for the analysis consisted of 180 IPOs that took place at ISEduring the period from 1993 to June 1999. The study used both traditional and

extended model for establishing the relationship based on the given characteristics ofthe IPO.The application of the traditional model on the IPOs in Turkey found norelationship between initial day IPOs returns and the underwriter reputation regardlessof which reputation measure is used. However, a positive relation was found betweenthe initial day IPO returns and 15 day return on the market index before the first dayof trading. However, after controlling the factors that are important in determining theprice of an IPO in an emerging market, a complex relationship between underwriterreputation measures and IPO returns was documented in the study.In the extended model also, the study found a negative relationship betweenthe IPOs return and the underwriter reputation because these underwriters were well

known to the investors. The researcher further found a positive relationship betweenthe volume of IPOs handled by a particular underwriter and the initial day IPO return.40The variables having significant positive impact on the IPO under pricing inTurkey were found to be the age of the issuing company and the relations of the IPOfirm and the underwriter. When underwriter was not related to the IPO firm, investorshad a greater confidence in the certification of the IPO price. The researcherconcluded that the underwriter reputation and the initial day return findings in USAmarkets should not be extended to emerging markets without any modification.Anand (2002)11 and others in their research paper studied the long term relationshipbetween business firms and investment banks with the premise that it leads to betterallocation of resources in the economy.The objective of the paper was to study the conditions that must be met forsustaining relationships between the investment banking and the security market. Thepaper stated that the investment banking structure was determined by the technologyof relationships. The author developed a model of this relationship with theassumption that investment bank must incur a sunk cost to establish this relationship.The author also discussed the policy implications to develop this relationship as thesize-distribution of business firm depended heavily on the structural characteristics ofthe economy. While policy can probably remove obstacles that increase the cost ofrelationships, the size distribution of business firms determined whether aninvestment banking industry was feasible: it will not emerge if large firms are few.Joint Parliament Committee (2002)12 which was set up to look into themanipulation and irregularities in the securities market, as a result of Ketan Parekhscam, submitted its Action Taken Report (ATR) on December 19, 2002. The JPC hasmade 276 observations/ conclusions/ recommendations. Each of the observation hasbeen listed in the report along with the response of the Government.The Committee in its report held the stock exchange authorities, SEBI, RBI,Department of company Affairs (DCA) and Finance Ministry responsible for the stockmarket scam. The report criticized SEBI for its failure to monitor and regulate the


6/21

securities market, for its lack of action in case of mismatch between movements in theprimary and secondary market, the absence of regulatory framework for the privateplacement to the detriment of the primary market and negligence in checking whetherbull operators obtained bank funds to finance their market operations. SEBIs trackrecord of punishing wrong doers was found unsatisfactory by the JPC.

41The report also termed RBIs supervision as weak and inefficient. RBI wasfound to have failed in taking timely action in preventing diversion of funds from thecountry and checking the irregularities in the functioning of certain banks forproviding undue advances for security market transactions. The Finance Ministry wascriticized for not keeping a watchful eye on the UTI that resulted into a crisis in itsfamous scheme US-64.With regard to primary market, the report further pointed out that pricing andtracking the end use of funds was totally neglected by SEBI. The report pointed outthat pricing of securities in primary market was a difficult task and leaving this issueentirely to the discretion of management, based on the recommendations of the

merchant bankers, did not serve the interests of small investors.The Committee gave a number of recommendations like speeding up of theprocess of demutualization and corporatization of stock exchanges to implement thedecision to separate ownership, management and operations of stock exchanges;affecting legislative changes for investors protection and enhancing the effectivenessof SEBI as a capital market regulator.Kenourgios (2002)13 in his research paper analysed the initial performance of GreekIPOs and studied the relationship of under pricing with the underwriters reputationand oversubscription. The data for the study related to 169 IPOs listed on Athens(Greek) stock exchange (ASE) over the period 1997-2002. The initial performance ofthe IPOs was measured by raw returns and the excess or adjusted returns on the first,fifth and 21st day respectively.The study found a high average percentage of raw return as well as excessreturn from IPOs. The average raw returns were found as 52.7%, 44.78% and 41.84%on the first, fifth and 21st day respectively. Similarly the excess (adjusted) returnsduring the period were 54.28%, 45.32% and 43.83% on the first, fifth and 21st dayrespectively. The study further found a high positive correlation (0.799) between thenumber of times of oversubscription and the first day adjusted returns of the IPOs. Onthe other hand, initial excess returns of the IPOs was found as negatively correlatedwith the underwriters reputation and hence supported the Beatly and Rittershypothesis of prestige underwriters. The downward trend in both raw and adjustedreturns over the time reported in the study was found to be consistent with thefindings of other studies on the Athens Stock Exchange. The researchers concluded42that the worldwide phenomenon of under pricing of IPOs of stock was a challenge tothe efficient market hypothesis.Gupta (2002)14 in his paper examined the performance of merchant banks in India onthe basis of their different positions (lead manager, co manager, and adviser) anddifferent categories of ownership (Public, private and foreign). The researcherselected 104 working merchant bankers out of 164 registered with SEBI and covered


7/21

the period from 1997-98 to 2001-02.The researcher concluded that the private sector merchant bankers performedwell as compared to public sector and foreign merchant banks both as regards topublic issues managed and the amount of funds raised. Although, public sector andforeign banks performed identically as regards total number of public issues managed

but the performance of foreign merchant bankers was better than that of the publicsector banks in terms of funds raised. The author pointed out that merchant bankingwas mainly restricted to the activity of issue management and other activities such asunderwriting, loan syndication, investment counseling and portfolio managementwere still not much emphasized. The researchers recommendations included the needfor providing quality services, functional cum expert oriented organization and a teamof specialists.Findlay (2002)15 and others in their paper discussed some considerations involved inimplementing Customer Relation Management (CRM) in the field of investmentbanking. They were of the view that increased competition and shrinking margin hadforced investment banks to rethink their fundamental approach to client management

and redesign their coverage strategies by use of information technology.The author was of the view that investment banks must respond quickly to thepressures from their clients to improve client management process and systems as theclients regarded investment bankers as the core providers of services. Selecting and managing the right client set, determining the products and services, reducing the costof coverage and co-ordination of multi product, multi country relations are the CRMchallenges before the investment bankers.For the implementation of CRM system, the author recommended the globalunderstanding of each clients situation, creation of new and sophisticated financialinstruments, sharing of qualitative and quantitative information with the clients andthe feedback from the clients.43Hyderabad, R. (2002)16 in their paper attempted to study the overall performance ofmerchant bankers in the area of public issue management from 1989 to 1998. Thecriteria for evaluating the performance of merchant bankers included number of issueshandled, average amount handled, instrument wise performance (equity, preferenceshares, debentures), the number of times the issue was oversubscribed and sector wiseanalysis.The study found bank subsidiaries as the market leader in respect of numberand amount of public issues handled. Competition and professionalism in publicissues management and the dominance of private merchant bankers was noticed. Theinadequate infrastructure, inexperienced staff, unhealthy competition, tight rules andregulations by SEBI had been the major problems of merchant bankers in India.The author suggested for changing yardsticks of performance in post issuemanagement services, widening the area of equity culture, establishment ofindependent training institutes, and clear and consistent regulations for merchantbankers by SEBI for improving efficiency of merchant banks.Lakshmanna (2002)17 in their study aimed to analyze the functions of merchantbanking and their performance evaluation based upon a sample of merchant bankersduring the period 1994 to 1999. The authors observed that the sluggishness in the


8/21

primary market forced most of the category 1 merchant bankers to withdraw frommerchant banking activities and changes in rules and regulations had also significantimpact on their functioning and performance. The study also found that most of themerchant bankers concentrated on floating the public issues function whileunderwriting was secondary. The study did not find a direct correlation between

number of issues in each activity to the size and value of the issue. The authorsrecommended professional approach in their working and adoption of best practicesof corporate governance for improving the performance of merchant banks.Mallik(2002)18 in his article stated the conflicting interests in the investment bankingprofession. In the primary financial service market, the investment banks operationsincluded raising money for companies and corporations by issuing and brokeringsecurities and providing advice to companies. The raising capital for companies,advising investors and trading stocks for their proprietary trading activity oftenresulted in direct conflict and the merchant bankers had to balance between all these.Sometimes the inner information acquired by an investment bank from advisory44

services rendered to a company was used to help its competitors in a hostile takeover.The author concluded that against the backdrop of inherent conflict of interests,implementation of ethical practices was the only savior and hence the ethicalguidelines (code of conduct) issued by the regulatory authorities assumed importance.Srinivasan (2002)19 conducted an empirical study on the marketing problems ofcertain market players in financial sector including merchant bankers. According tohim, the marketing problems as revealed by merchant bank respondents werefluctuations in security market, frequent changes in interest rates and policy,competition for funds from other institutions (mutual funds, insurance, foreign banks),lack of systematic efforts at image making by merchant bankers, lack of properbranding among merchant banking products, lack of effective media exposure, lack ofoverall marketing coordination and segmentation. The author presented a bright futurefor merchant banking in India since infrastructure projects, power projects and Euroissues were getting big thrust under the liberalization policies of the government.Madan (2003)20 in his research paper studied the under pricing of initial publicofferings during the period 1992-95 and found a very high initial excess return onIPOs in the Indian primary capital market as compared to the experience of capitalmarkets of other countries. The study covered a set of 1,597 companies with IPOsduring 1989-1995 listed at the BSE. The study found that out of the 1,597 IPOs, 72issues were fairly priced (Zero return on listing), 157 were overpriced (negative returnon listing) and 1368 issues were underpriced (positive return on listing). Initial returnon IPOs was found to be quite high (94%). Year wise performance in terms of returnon listing was found to be as high as 287% for the year 1991 and as low as 26.6% forthe year 1995. Also issues at par were seen to perform better than issues at premium.A negative relationship was found between return on listing and the issue price andthe size of the issue (lower the issue price and size, higher is the returnaccrued).However, a positive relationship was established between return on listingand the foreign equity holding in the company as also the issue rating.The paper concluded that the return was high on IPOs in the short period, butit declined with the passage of time. There has been a drastic fall in the return on IPOs


9/21

in the long run and returns were found to be negative from the second to fifth year oflisting. The paper also highlighted the emergence of private placement market in Indiaas it was both cost and time effective method of raising funds. However, it was highly45informal market. So author suggested for guidelines by SEBI for private placement

market.Dhawan (2004)21 in his article identified the decline in revenue of investment banksin the year 2000 due to the meltdown of equity issues, and merger and acquisitiondeals. The bidding war between various investment banks had pushed the fees onprivatization deals to less than 1% of the deal size (one of the biggest $ 2 billionONGC deal was won by Kotak at 0. 075% and GAIL bid went to HSBC at 0.14%)The fees for private sector deals too were lower at 2.5%. During boom period, SilverLine Technologies and Rediff.com had paid 7% to their investment banks for raisingcapital and getting itself listed. Even the Govt. paid higher fee in those days (1.24%for VSNL GDR and 2.25% for GAIL GDR).The author pointed out that commercial banks like ICICI banks, Citigroup and

HSBC Securities improved their ranking in the M&A advisory business at the cost oftraditional players like DSP Merrill Lynch & JM Morgan Stanley.The paper foresaw the major component of investment banking revenue fromraising equity capital than other activities. The author recommended that Indianmerchant bankers should tie up with global firms to tap the growing market of crossborderacquisitions.Ghosh (2004)22 in his paper empirically investigated the boom and slump phases inthe Indian primary capital market. The paper attempted to analyse the factors thatinfluenced the volume, under pricing and timing of IPOs in the hot and cold phases inIndian IPO market. The study covered the period from 1993-2004 which was furtherdivided into two phases: boom phase (1993-96) when on average 50 companies gotlisted on BSE on monthly basis and slump phase (1997-2001) when there was aconsiderable decline in the number and total amount of new issues.The study found that during the boom period, a companys decision to gopublic depended more on past IPOs volume as compared to slump period. Empiricalevidence found no significant relation between IPO volume and initial returns duringhot and cold period. The main reason for this was the long time taken by Indiancompanies to get listed on the stock exchange after the decision to go public.The researcher also studied the effect of other parameters (industry type, ageof company, size of new issues) on the volume of IPOs in hot and cold market and46found no significant influence of industry affiliation on the IPOs during the hotmarket.The paper concluded that the established companies raised large amount fromthe primary market and under pricing considerably was more during the cold phasewhereas the small and young companies timed their public issues during the boomphase in the primary market.Gupta (2004)23 in his article stated that the integration of Indian economy and itsdynamic status calls for a number of challenges for investment banks in India.According to the author, the problems faced by Indian investment banks included


10/21

increasing competition, tough operating environment and decreasing margin. Somecritical areas which pose a challenge to investment banks are broadening the customerbase, ensuring due diligence, appropriate valuation process, strong relationmanagement with customers, trusted and strategic advice, compliance to ethical andregulatory code of conduct and accurate and greater disclosures.

The author recommended for the integration of Indian merchant banking withglobal financial markets so as to have a major focus on investment in intellectualcapital, placement and marketing capabilities, size and scope of services, relationshipmanagement, transparency in disclosure practices, corporate governance and use oftechnology for cost effectiveness.Khan (2005)24 in his article highlighted the excellent performance of the primarycapital market in 2004-05. The major reasons for this boom were found to be lowinterest rates, recovery of investors confidence, high growth of GDP, FII inflows,efficient exchange rate management and good liquidity in the economy. Average sizeof the issue has gone up to Rs. 470 crore in 2004-05 as compared to Rs. 11.7 crore in1995-96 due to the arrival of mega issues and the exist of small companies. The small

companies raised relatively small amount from the market due to high transactioncosts, high listing fee and strict disclosure norms set by SEBI to protect investors.The author expressed concern that funds raised by Govt. companies, financialinstitutions and banks might not result in capital formation and hence might not leadto higher production, economic growth and employment generation. He pointed outthat 99.8% of equity shares were raised at premium during 2004-05 as compared to76.6% in 2000-01. This showed the high expectations among investors for safe, fairand honest capital market. But academicians had reservations about this as they felt47that qualified institutional investors, FIIs and high net worth investors in collusionwith the issuers were able to manipulate the share prices due to the asymmetry ofinformation in the stock market.The recommendations by the author included improvement in the informationefficiency in the market and implementation of corporate governance not only bylisted companies, but by market intermediaries also.Sharma (2005)25 in her research paper studied the marketing effectiveness inmerchant banking services in India. According to the researcher, the liberalizationprocess in India has led to major developments in the industrial sector to make India atruly formidable and globally competitive industrial power and consequently, themerchant banks have emerged as an important intermediary in the financial market.The study aimed to analyse the relevance of marketing mix in the merchantbanking services and to make a comparative analysis of its effectiveness of public aswell as the private sector merchant banks.The researcher found that the people was the most important component ofmarketing mix followed by product, price, promotion and place respectively. Theresults also showed that private sector merchant banking had more effective andefficient marketing mix as compared to public sector merchant banks. Unbalancedservice mix with the dominance of issue management, inadequate quality of services,inadequate distribution network and inadequate promotional measures were found tobe the major deficiencies which hindered the marketing performance of merchant


11/21

banks in India.Swedberg (2005)26 in his article analysed the corporate scandals in the US during2001-02, which involved the relationship of business analysts and the investmentbankers. The business analysts, who were supposed to give unbiased advice toinvestors about which shares to buy and sell, connived with the investment bankers

and helped them to attract business through overly optimistic analysis resulting intoworse long run performance of IPOs. The brokers, instead of becoming trustworthy totheir clients (small investors) were also committed to the investment bankers.Dolvin (2006)27 in his research work evaluated the commonly believed assumptionthat underwriters had perfect foresight of the market and they made subjectiveadjustments to estimated values in order to select a final offer price of the issue. The48underwriters ability to fix an appropriate offer price that reduced the under pricing to zero would create maximum value to the issuer.The researcher studied the offer price selected by underwriters relative to offerprice estimates using three valuation based approaches. The primary services rendered

by underwriters have been classified as legal and administrative, certification andmarket building and the pricing of the issue.The researcher, due to lack of a single method to value the equity security, hasdiscussed three methods for determining the offer price, that is, a full informationprice that uses current and past information available at the time the offer price isselected, the residual income mode, which is an accounting derivation of the standarddividend discount model, and a standard price ratio forecast using all firms in thesame industry.The study is based on a sample of 3,092 IPOs covering the period of 1990-1998 in the United States. The average IPO offer price was found to be $ 38.89million and the average initial return was 15.85%.The researcher also examined the pricing ability of underwriters and foundthat medium and high quality underwriters captured more value for issuers than thelower quality underwriters. The researcher concluded that underwriters did createvalue for the issuers and that the value captured increased with the quality of theunderwriter.Mayur (2006)28 in his research paper examined the determinants of public issuedecision by the Indian companies. The study classified these determinants into twocategories. Company factors included age, size, risk, profitability, leverage andgrowth of the company. Macro economic variables included interest rates, stockmarket returns, stock market indices and liquidity.The IPO sample, which was categorised into two groups (IPO sample andPrivate sample) included all IPOs completed in Indian primary market from 1999 to2005. Private sample included all those companies that were eligible to do an IPO butremained private during the study period. The sample for the analysis consisted of 150IPOs and 2000 private companies during the period under review.The study found that company size, profitability, age and leverage were thesignificant determinants regarding decision to go public. The study found strongevidence that Indian IPOs had not been motivated by financial needs. The larger and49


12/21

profitable companies were found more likely to go public. Leverage and age of thecompany were found negatively related to the probability of IPO by the company. Thestudy further found that the cost of credit, cost of disclosure, owners diversificationdesire, listing cost, liquidity and market timing were the factors influencing IPOdecision.

Pandey (2006)29 conducted a study to examine whether the IPOs at NSE wereunderpriced and whether the degree of under pricing was influenced by the demandfor the IPO, delay in listing and the money spent on the marketing of the issue.The period covered for the study was 26th March 2004 to 31st October 2006,during which 121 companies came out for the public issue but only 55 IPOs wereselected for the study. The degree of under pricing was measured as the ratio of thedifference in closing price on the day of listing and offer price to the issue. The degreeof under pricing for the sample companies were found to be varying from -33.04% to82.50% with a mean value of 22.62%, While fifteen IPOs were found to beoverpriced and 40 IPOs were underpriced on the day of listing. The researcher foundthe reduction in the degree of under pricing in the Indian stock markets over the years

which is good for the firms as under pricing is an indirect cost to the firm. Demandgenerated for the issue and the listing delay were found to be the major reasons forunder pricing while the effect of money spent on the marketing of the issue wasinsignificant. The IPO average performance after one month of listing was found tobe negative as compared to the average return of one month of listingPatil (2006)30 in his article analysed the IPO benami demat scam and exposed thedubious means adopted by the scamsters in the IPOs of Yes Bank and IDFC Ltd. Thescamsters led by Roopalben Panchal opened thousands of fictitious/benami demataccounts with Karvy Depository Participant (DP) and Pratik Stock Vision DP. Thesebenami demat accounts were used to corner the Yes Bank and IDFC Ltd. shares fromthe retail category. Similarly the banks which opened fictitious accounts for scamstersincluded Bharat Overseas Bank, HDFC Bank, Indian Overseas Bank, ING VyasaBank and Vijay Bank.The study found that Roopalben and Sugandh cornered a total of 11.44 lakhshares (6.54% of the total) of Yes Bank IPO from 7630 benami demat accounts.Similarly, Roopalben and three other persons received a total of 1.70 crore sharesfrom 43,982 fictitious demat accounts from the IPO of IDFC Ltd. These shares50accounted for 8.28% of total shares issued by IDFC. The off-market transfers weredone by the scamsters in the favour of other persons including financiers immediatelyafter allotment and before the shares were listed. SEBI and Depositories (NSDL andCDSL) blamed each other for the failure to detect the fraud.The author was of the view that such a scam could not have occurred withoutthe active connivance and collusion of some of the bank officials as well as thedepository participants. Even the role of the merchant bankers and registrar to theissue had also come under the SEBI scanner for their failure to identify and weed outbenami applications. The author felt the need for stern and quick action by the SEBIand RBI against the scamsters as it is a question of the confidence of the retailinvestors and the health of the primary market.Haldea (2006)31 in his article stated that booming of primary market was due to the


13/21

strong secondary market conditions. The author appreciated the major reforms inprimary market especially banning of discretionary allotment to QualifiedInstitutional Buyers (QIBs), imposition of margin money for QIBs and theintroduction of ECS (instant credit of refunds to the bank account).To further accelerate the primary market, the author stated eight measures for

the IPO reforms. These included the greater reservation in IPOs for small investors,larger public offer as a percentage of companys equity capital, simplification of IPOprocess (simple application form), a coordinated effort between the Companies Actand the DIP Guidelines of SEBI to arrive at the new disclosure standards and formatfor small investors, monitoring the utilization of issue proceeds and compensation toinvestors in case of IPO fraud.The author suggested that PSU divestment should be resumed to increase theinvestors base in the market and it should be reserved only for retail investors. Theauthor further stated that 50% portion of an IPO reserved for QIBs should beauctioned and the balance portion of IPO should then be sold through fixed priceroute to the retail investors. The fixed price could be the lowest of the QIB allotment

price or the average of the bottom five QIB allotment prices.Sravana ( 2006)32 in his paper studied the SEBI plan to introduce voluntary gradingof IPOs on a five point scale in the wake of YES Bank and IDFC IPOs scams. IPOgrading is a service carried by SEBI registered credit rating agency aimed atfacilitating the assessment of equity issues offered to public. It is not a51recommendation for investment, but only one of the inputs for the investors toconsider the shares in their decision making process. It will enable the merchantbankers to market a high rated IPO issues. The author while feeling the need for IPOgrading also raised the concern about the complex process of grading as also itsbiasness and it being optional. The author recommended the regulator (SEBI) tosafeguard investors from the nexus between credit rating agencies and the merchantbankers.Saha (2006)33 in his paper reviewed the different aspects of book building process ofpublic issues and merchant banking activities relating to such process in the Indianprimary capital market. The author was of the view that though the merchant bankersremained almost stagnant and stereotyped till the 1990s, they witnessed a remarkablegrowth after the process of economic reforms and deregulation of the Indian economydue to structural modifications, introduction of new mechanism and instruments andadoption of a number of steps to safeguard the interest of investors through moredisclosures and transparency.It was observed in the paper that in most of the public issues under bookbuilding methods during 2003 to 2006, only a few merchant bankers performed theiractivities as BRLMs. The issuing companies usually approached those merchantbankers who had the reputation and a very good track record in the market. The paperconcluded that the reforming and restructuring of the economy had opened up severalopportunities as well as challenges for financial services industry including merchantbanking. Dynamic, strategic and vigorous merchant bankers are required to meet thechallenges with a view to improve the corporate finance and to establish a healthycorporate environment.


14/21

Kumar (2007)34 in his research paper examined the efficiency of book buildingpricing mechanism in Indian IPOs by considering both direct costs (issuemanagement expenses) and indirect costs (under pricing of IPOs).The study covered the period from 2003 to 2007 and a sample of 208 IPOsfloated in Indian primary market (157 book building Issues and 51 fixed price issues)

was taken for the purpose of the study. To compare the cost of fixed price issues andcost of book building issues, the variables used included the age of the firm, BRLMsreputation, concentration of share holding, market sentiment, size of the issue and thevolatility of the market.52The study found that fixed price method had been used by the companies withsmaller issue size and book building route had been preferred by issuer companieswith large issue size. The study further found that smaller sized fixed price issuesexperienced more under pricing than the large sized issues. No difference in theunder pricing level was found between larger and smaller sized book building issues.The average cost of fixed price offers and book building offers was found at

25% and 23.67% respectively. Overall total cost of small size fixed price offers hadbeen more than of large size issues. However, no difference was found in the total costof small and large sized book building issues. Analysis showed that the issue expensesfor smaller issues were lower than those for large issuers for fixed price offers,whereas the smaller issues were more costly than large issues for book buildingissues.The regression results showed that the issues managed by syndicate with USbased lead managers did not fare better than those managed by Indian merchantbankers on both counts, that is, total cost and under pricing level. Further, size of theissue, listing delay and the reputation of the book runner lead manager were found tobe the important determinants for choosing the IPO issuing mechanism.Barua (2008)35 in his paper stated the happenings in the secondary market, subprimecrisis and the slowdown of the US economy as the major reasons for withdrawal of anumber of IPOs in India. The author blamed the lead managers to the issue (MerchantBankers) for their poor professional judgment in pricing and advice to the issuer. Theauthor did not see any structural problem with the Indian primary market, however,huge over subscription of issues, high premium in the grey market and the collapse ofthe premium on the listing were described as the causes for manipulation in theprimary market by vested interests. Putting a band on the day of listing (as proposedby SEBI) was not favoured by the author as it would lead to breakdown of the market.The author recommended some measures to improve the functioning of theprimary market which included the removal of facility of part payment for the issue,removal of funding applications, disallowing a company to enter the primary marketfor one year if it had withdrawn the issue and putting on record in the public domainof lead managers in terms of under and over pricing of issues.Gopalswamy (2008)36 conducted research on IPO market in India with the purpose toinvestigate empirically the difference in long period post issue performance of IPOs53that entered the primary issue market through fixed price and book building offers. Asample of 50 IPOs listed at NSE out of 183 IPOs floated during the period 1999-2004


15/21

was taken for the purpose of study.The researcher found that the fixed price offerings as compared to bookbuilding gave high initial median and average returns during the second and thirdyears of listing. Average percentage returns of IPOs through fixed price route werefound at 39%, 39%, and 30% at the end of 1st, 2nd and 3rd year respectively. On the

other hand, average percentage return from Book Building IPOs was 48%, 30% and24% respectively at the end of first, second and third year. Sector wise analysisshowed that boom phase sectors like IT and Pharmaceuticals yielded higher returnsthan other sectors in the long run. The study further stated that during the initial years,the returns were quite comparable irrespective of the method used for the issue ofshares. But the long run performance differed, to a great extent, depending upon themethod of pricing of the IPO. The study found that there was a tendency for the fixedprice issues that yielded initial positive returns to underperform in the later periods. Inthe case of book built issues, the positive returns persisted during the later years also.The researcher concluded that irrespective of the issue method followed, theaverage short run returns did not differ significantly and a significant difference was

found in the long run performance of IPOs.Krishnamurti (2008)37 in his paper examined the functioning of the grey market inthe Indian IPOs with the purpose to investigate the investors sentiments and aftermarket performance of IPOs. Grey market trading include trading (buying and selling)applications for a fee and trading allocated shares through an IPO issue before theylist on stock exchange.The data taken for analysis included 75 IPOs floated from May 1, 2007 toDecember 31, 2008. The last grey market price to the listing day was taken foranalysis. Grey market premium (GMP) was measured as the ratio of grey market priceto offer price. The issues were classified as low GMP if the GMP on the day beforelisting was below or equal to the median for the sample and other issues were termedas issues with high GMP.The researcher found that large size firms with more profits and asset valueper share enjoyed higher grey market premium. Grey market premium has also beenfound to be directly proportionate to the issue size and reputation of the lead manager54to the issue. The paper further found that aftermarket returns started correcting sharplyfrom the listing day onwards when grey market prices were used as a base. The studyconcluded that grey market prices were highly predictable and were related to thesubscription level of investors and initial listing returns were positively andsignificantly related to grey market premium.Khurshed (2008)38 examined the association between subscription pattern, offerprices and the under pricing of book built IPOs in Indian capital market. Theresearcher studied the subscription pattern of three different groups of investors viz,qualified institutional buyers (QIB), non institutional investors and retail investors.The under pricing of IPOs was examined by dividing it into two components, onerelating to pre listing which was set by the underwriter (Lead manager) and the otherfrom the post listing period determined by the market. The pre listing period hasfurther been split into two parts: the pre book building period immediately followingthe road show at which time the price band was determined, and the mandatory book


16/21

building period where the pattern and timing of various investor groups were visible.Subscription pattern of different groups of investors was studied on the day-to-daybasis for the period the issue remained open.The sample for the study was the 239 IPOs floated by corporate bodies inIndia through book building process during the period from March 1999 to March

2008. The study found that the subscription level of non institutional investors andretail investors was significantly influenced by the subscription pattern of QIBs. Also,higher the offer price within the band, the greater was the level of aftermarket underpricing. The study further found that the non institutional buyers followed the lead ofQIBs in the pre listing period and not in the post listing period. In the post listingperiod, the under pricing of IPOs was driven primarily by the unmet demand of thenon institutional buyers and retail buyers. QIBs were not found active to participate inthe aftermarket period. A high correlation was found between the after listing underpricing and the demand from non institutional investors and retail investors and to alesser extent by the subscription level of QIBs. The researcher has concluded that thetransparency of the book building process in Indian IPO market helped in reducing or

removing the winners curse for the retail investors.Shah (2008)39 in his article studied the effectiveness of price band based bookbuilding method in pricing of IPOs. The author was of the view that getting IPOs55withdrawn by the issuers was part and parcel of any market due to the price mismatchbetween buyers and sellers. The author has raised the issue of pricing process, pricingrange and lengthy IPO process to make the IPO process user friendly and efficient forretail investors. For determining the fair valuation of the issue, the merchant bankershave to play the role of trusted advisor and it should be based on what the marketshould bearinstead of what the market can bear.According to the author, this price lied between the price determined as perCCI formula and through book building process. The author further suggestedincreasing range for price band from 20% to 40% due to more market volatility andminimizing the time gap between closure of subscription for issue and listing to justover a week.Gopalan (2009)40 in his paper studied the importance of public equity market in thefirms investments and growth in emerging economy of India. The sample period ofstudy was taken from 1992-2002. First half of the sample period ( 1992-96 ) wasspecified as hot market for equity market in India, when 1094 firms went public forfirst time and more than 200 firms completed secondary equity offering (SEO). In1997, both the IPO and SEO markets collapsed and remained relatively inactive till2002. Only 81 firms in the sample floated IPOs during 1997-2002 compared to 1094from the period 1992-96. Similarly, only 22 SEOs were completed after 1996 ascompared to 209 from 1992-96.The study found that the public equity market in India expanded to financesmall and young firms. Firms that went public prior to the collapse were smaller (interms of total sales) and younger (as measured by age since incorporation) relative tothe average private firms in the sample. The decline in equity issues in India wasfound due to collapse in investors confidence, decline in foreign capital inflows andAsian financial crisis in 1997.


17/21

Post IPO performance of companies showed a significant growth in sales oneyear after the IPO and continued to grow at the faster rate until about three years afterIPO. After the collapse of the equity issue market in 1997, only well established firmswith high investment were able to to go public, and the IPO markets role as a sourceof finance for small, young firms was diminished.

The study concluded that both public and private firms in India were adverselyaffected by the collapse of the equity market, but small and young firms appeared56particularly sensitive in the absence of a strong IPO and SEO market. The studyfurther concluded that newly established public firms, non group firms, young firms,firms with few intangible assets and with greater needs for external finance exhibitedmore decline in growth, investment and profitability following the equity marketscollapse.Singh (2009)41 conducted a study on equity issues and investors protection in India bystudying the disclosure practices in the offer documents of issuing companies andevaluating the role of merchant bankers in pricing the equity issues on the basis of

rate of return obtained by investors at different points of time. Based on a sample of322 equity issues floated by corporate bodies during the period from 1992-93 to 2003-04, the study found that IPOs issued at par performed better than IPOs issued atpremium at all points of time covered by the study. The study revealed that bookbuilding was a better method in equity share pricing than the conventional fixed pricemethod as investors obtained positive return from more percentage of equity issuesthan fixed price issues during the period under review.The performance of merchant bankers was evaluated in the study by dividingall merchant bankers into six groups on the basis of their involvement in the equityissues. On the basis of percentage of equity issue handled by each group of merchantbankers, the study found that non-bank private merchant bankers performed betterthan other groups of merchant bankers as their services were availed by as many as26% of issuers under study. Further, the study highlighted that the best performance,on the basis of first day return, was provided by the public issues of equity sharesjointly managed by private sector banks and non bank private sector merchantbankers. The study further revealed that the best performance was provided by issuesmanaged jointly by the financial Institutions and public sector banks, where positivereturn to the investors was provided by 65% issues under study.The study concluded that no group of merchant bankers could completelycheck the problem of negative return during the period under study. It pointed out thatthough there were numerous other factors which influenced the market performanceof equity shares on stock exchange, the role played by the merchant bankers leftbehind many unanswered questions when negative return was linked to overpricing ofthe issues.57

2.2 Need for the Present StudyPrimary market in India is dynamic as it has a close relation with secondarymarket fluctuations. Merchant banking, as an intermediary, plays a crucial role in thedevelopment of primary market by exploring the ways and means for the mobilizationof funds. Merchant bankers ensure the success of an issue by lending their expert


18/21

guidance and advice regarding the type of the issue, preparation of prospectus, timingof issue, pricing of issue and allotment of shares etc.The SEBI (Merchant Banking) Regulations as amended from time to timeintroduced a number of reforms for more transparency in disclosure requirements inoffer documents, abolished different categories of merchant bankers by making it

compulsory to register only category 1 merchant banker and limited the area ofmerchant banking to non fund activities only. The amendment in the Act alsointroduced a good surveillance system and professionalism in merchant bankingresulting in non professional and fraudulent merchant bankers out of scene.Introduction of free pricing of issues, institutionalization of investors (MutualFund, FIIs etc.), requirements of high standards of integrity, fairness, transparency andaccountability have changed the role of merchant banking in India. Despite severalamendments and modifications in the SEBI regulations from time to time, it has beenfound that several IPOs scams such as Yes Bank, IDFC etc. took place during theperiod 1997 to 2006. These scams showed failures of the regulatory mechanismsystem evolved so far.

Literature on capital market in India reveals that the share of capital marketsecurities in resource mobilisation has declined over the period and only a very smallproportion of population has been participating in the capital market. RBI statisticsshowed that the share of financial savings of the household sector in securities hasgone down from 22.9% in 1991-92 to 2.9% in 1997-98, 1.7% in 2002-03 and 1.1% ofGDP in 2003-04 and 2004-05, though it showed a little bit improvement in the latteryears. The disenchantment of household sector with securities is also confirmed bythe SEBI-NCAER survey which found that only 2.8% investment of all householdswere in securities during 1997-98, indicating low priority of investors for securities.Another survey of SEBI-NCAER on Indian investors in June, 2002 reported that only7.4% of Indian households invested in equity and debt issues either directly or58through mutual funds. The comparative figures for UK stood at 23%, for Canada46%, Germany 18%, France 48%, Australia 50% and US market about 48%.Similarly the participation of investors in the capital market, as judged fromthe number of demat accounts, has been very small. The number of demat accountswith the two depository services stood at only 99.00 lakhs as on December 31, 2006.It further increased to 1.433 crore on December 31, 2008 and 1.45 crore as on March31, 2009.This figure is just about one percent of the total population of the country.This shows the lack of retail investors confidence in the primary capital market in India and it is a big challenge to the merchant bankers in India.It emerges from the review of literature that most of the studies in the field ofmerchant banking are related prior to SEBI (Merchant Banking) RegulationAmendment Act, 1997. Previous studies on the subject mostly concentrated onevaluation of organization and management, and overall functioning of merchantbankers, and rules and regulations relating thereto.No research work has so far been conducted in India to study exclusively therole of merchant bankers in the management of public issues. Merchant banking is astatutory adviser to the issuer companies in all matters relating to the issue of capital.So there is a need to analyze the growth, performance and role of merchant bankers in


19/21

the primary market in India as well as opportunities and challenges faced by themespecially in changing scenario of capital market after 1997. This has been anunexplored area of research till date and hence the present study "Role of MerchantBanking in Managing Public Issues-An Empirical Study with Special Reference toPost 1997 Era" has been undertaken.

59REFERENCES1. Verma, J.C. (1990),Merchant Banking- Organization and Management, TataMcGraw Hills Publishing, New Delhi.2. Murthy M.R. and Alok Puranik (1993), Cost of Raising Capital- A Study of PublicIssues Made During 1992-93, Institute for Studies in IndustrialDevelopment, New Delhi.3. Shah Ajay (1995), The Indian IPO Market: Empirical Facts, www.cmie.ernet.in.4. Srivastava, Sanjay Kumar (1995),Management of Public Issues- The MarketingAspectDevelopment of Stock Market in India, (edited), AnmolPublication, New Delhi,

5. Aggarwal, Madhu (1996),An Appraisal of the Working Of Merchant Banking inIndia, Ph.D. Thesis, Department of commerce, Delhi School ofEconomics, University of Delhi.6. Narta S.S. (1996), Underwriting of Capital Issues in India-Progress and Practices,Finance India, Vol. X No.3 September, 1996, pp 693-698.7. Kailani, Meru, Merchant Banking in india- An Appraisal, An Unpublished Ph. D.thesis Submitted to Faculty of Business Management and Commerce,Panjab University, Chandigarh, (1999).8. Qumar, Mohd. Javed, (1998),Marketing of Financial Services, GagandeepPublications, New Delhi, (2004).9. Mohiadeen Meera, P.M. (1999),A Study on New Issue Management Services of

Lead Merchant Bankers in India, (1999), Unpublished Thesis,Bharathidasan University, Tiruchirapalli, Tamilnadu.10. Guner, Nuray, Zeynep Onder and Rhoades Seza Dansogin (1999), UnderwriterReputation and Short Run IPO ReturnsA Re-evaluation for an

Emerging Market,

11. Anand, Bharat N. and Alexander G. (2002),Investment Banking and SecurityMarket Development: Does Finance Follow Industry? WorkingPaper, International Monetary Fund, www.imf.org12. Joint Parliamentary Committee (2002),Action Taken Report of the JointParliamentary Committee on Stock Market Scam and Matters relating

thereto. Govt of India.

6013. Kenourgios D.F., Spyros Papathanasiou and Emmanouil Rafail Melas (2002),Initia Performance of Greek IPOs, Underwriters Reputation andOversubscription, Managerial Finance, Vol.33, No. 5, 2007, pp.332-343.14. Gupta K.C. (2002),An Appraisal of the Working Performance of MerchantBankers in India, Journal of Accounting and Finance, Oct.2004-March2005, The Research Development Association, Jaipur.


20/21

15. Findlay, Genevieve Peter Mathias and others (2002), CRM in Investment Banking

andFinancial Markets.CRM in financial ServicesA Practical guideto making Customer Relationship Management Work. (Edited), KoganPage, London.16. Hyderabad, R.L., Halasagai, S.O. (2002),Performance of Merchant Bankers in

Public Issue Management, Financial Services, Texts, Cases&Strategies, (ed.), Deep & Deep Publication Pvt. Ltd., New Delhi.17. Lakshmanna, B.C., Krishna Naik C.N. (2002),Merchant Banking in India, Deep& Deep Publication Pvt. Ltd., New Delhi.18. Malik Debasis (2002),Investment Banking: Conflicting Interest, CharteredFinancial Analyst, March, 2002, The ICFAI University Press,Hyderabad.19. Srinivasan, G. (2002), What Ails Financial Services in India?A case study ofcertain Financial Services Product, Financial Services, Texts, Casesand Strategies, (edited), Deep & Deep Publications, New Delhi.20. Madan Arwah Arjun (2003),Investments in IPOs in the Indian Capital Market,

Bimaquest- Vol.-III, Issue-I, January, 2003.21. Dhawan Radhika (2004), Under Pressure: Why Indias BiggestInvestment BanksShould Be Worried, Business World, March 8, 2004.22. Ghosh Saourabh (2004),Boom and Slump Periods in the India IPO Market, RBIOccasional Papers, Vol. 25, No.1, 2 and 3, Summer, Monsoon andWinter.23. Gupta, Indrajit (2004), Challenges for Indian Investment Banking, PrimeDirectory, (2005), Prime Database, New Delhi.24. Khan, M. Y. (2005),Primary Capital: Mega Issues, Macro Concerns, The Hindu-Business Line, August 2, 2005.6125. Sharma, Alka, (2005),Marketing Effectiveness in Merchant Banking IndustryAComparative Study of Public and Private Sector, Reading in ServiceManagement, (Edited), Institute for International Management &Technology, Gurgaon.26. Swedberg, Richard (2005), Conflicts of Interest in the US Brokerage Industry,Sociology of Financial Markets, (Edited), Oxford.27. Dolvin, Stevin, (2006) Do Underwriters create value for Issuer by subjectivelydetermining offers Prices?Initial Public OfferingsAn InternationalPerspective, (Edited), Oxford.28 . Mayur Manas and Manoj Kumar (2006),An Empirical Investigation of GoingPublic Decision of Indian Companies, MPRA Paper No. 1801, www.mpra.ub.uni.29. Pandey Alok and Vaidyanathan R. (2006),A Study of Initial Public Offerings onthe National Stock Exchange of India, www. rmi.nccu.edu.tw.30. Patil Prakash (2006),IPO Scam- Will It Impact the Primary market Sentiments?Dalal Street, Feb. 6-19, 2006, pp. 78-84.31. Haldea, Prithvi (2006), Time for More IPO Reforms, Article 48, Indian Express,Nov.20, 2006.32. Sravana Kumar, B. (2006),IPO Rating- A Primer, Portfolio Organizer, March,


21/21

2006, The ICFAI University Press, Hyderabad.33. Saha, Siddhartha Sankar (2006), The Book Building Mechanism of IPOs, TheChartered Accountant, August, 2006.34. Kumar SSS (2007),Is Book Building an Efficient IPO Pricing Mechanism? TheIndian Evidence, International Research Journal of Finance and

Economics, Issue 38, pp. 173-189.35. Barua, Samir K. (2008), Do the Difficulties faced by recent IPOs suggeststructuralProblems with the Primary market?A debate on what ailsthe Primary market, The Economic Times, Chandigarh, February 12,2008.36. Gopalaswamy, A.K., Kartikeya Chaturvedi and N Sriram (2008),Long Run PostIssue Performance of Fixed Price and Book Built IPOs: An Empirical

Study on India markets, Journal of Advances in Management Research,Vol. 5(II), 2008, pp. 64-76.6237. Krishmnamurti Chandersekhar, Tiong Yang Thong and S.R. Vishwanath (2008),

Grey Market for Indian IPOs: Investor Sentiments and After MarketPerformance.

38. Khushed Arif, Alok Pandey, and Singh Ajai K. (2008), Subscription Patterns,Offer Prices and the Under Pricing of IPOs, www. ssrn.com39. Shah, Rashesh (2006),Has the price band- based book-building method beeneffective in pricing IPOs?A debate on what ails the Primary market,The Economic Times, Chandigarh,40. Gopalan, Radhakrishnan and Tood A. Gormley (2002),Do Public Equity MarketsMatters in Emerging Economies? Evidence from India.

41. Singh, Swinder (2009),Equity Issues and Investors Protection in India,Unpublished Ph.D. Thesis, Guru Nanak Dev University, Amritsar.

Review of Litem rature

Documents

Transcript of Review of Litem rature