1. Financial strength information and institutional investor demand: Evidence from India
- Author
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V. Gopikumar, Smitha Nair, S Sreevathsava, and Raja Sreedharan V
- Subjects
institutional investors ,financial strength ,pitroski’s f score ,emerging market ,mutual funds ,foreign institutional investors ,Finance ,HG1-9999 ,Economic theory. Demography ,HB1-3840 - Abstract
In this paper, we examine whether foreign institutional investors (FII) and mutual funds (MF) show a higher preference for fundamentally stronger firms. We employ Pitroski’s F score and its constituents (profitability, efficiency, and leverage) to measure the fundamental strength of firms. Further, we examine the preferences of FIIs and MFs by conditioning on size and book-to-market ratio. Overall, the results indicate that both types of institutional investors prefer firms with higher expected profitability and are willing to take higher risks. FIIs show a higher preference for riskier firms and MFs prefer firms with higher profitability.
- Published
- 2019
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