Foreign institutional investors and security returns: evidence from Indian stock exchanges

India liberalized its financial markets by opening its doors to foreign institutional investors in September, 1992. We study this landmark event, by examining the impact of trading of Foreign Institutional Investors on the major stock indices of India. First, we find that unexpected flows have a greater impact than expected flows on stock indices. Second, we find strong evidence consistent with the base-broadening hypothesis. Third, we do not find any evidence that foreign institutional investors employ either momentum or contrarian strategies. Fourth, our findings support the price pressure hypothesis. Finally, the claim that foreigners’ destabilize the market is not substantiated. Keywords

Financial development, corporate governance and cost of equity capital

This paper explicitly examines the interactive impact of country level legal and financial development, and firm level governance attributes on the cost of equity capital. Using a comprehensive sample of 7380 firm years drawn from 22 developed countries, we show that firm level governance attributes affect the cost of equity capital only in the Common Law countries with high level of financial development. Our study is the first to highlight the complementary effects of legal origin, financial development and firm level governance attributes in influencing the cost of equity capital

Salt flux in a laboratory model estuary

Motivated by recent field observations, a laboratory model estuary experiment was conducted for the study of its flow and stratification. We find that a small inflow of cold freshwater, on top of warm saline water can lead to a large counter flow in the lower layer. This counter flow is part of a large aspect ratio convective cell driven by the horizontally varying diffusive cooling from above. Particle Image Velocimetry (PIV) measurement of the Reynolds stresses associated with transient tilted plumes embedded in this convective cell show that the viscous dissipation of the large-scale cellular flow is largely balanced by the Reynolds stress divergence of the tilted plumes. Using Optical Rotation measurements along with the PIV derived mean flow we find that the internal “salt” flux has Nusselt number (the ratio of convective to diffusive transport) of order 103. Although the convection is vertically forced, the flow is essentially horizontal, and there is very little vertical mixing across the interface between the two layers

Natural disasters: blessings in disguise?

This study examines the impact of natural disasters on market returns and on several industries that are likely to be affected by the disasters. We find that different natural disasters have different impacts on the returns of the market and on those of industries. Our evidence suggests that while earthquake, hurricane and tornado could negatively affect market returns several weeks after the events, other disasters such as flood, tsunami and volcanic eruption may have limited impact on market returns. We also find that construction and materials industry is positively affected by natural disasters but nonlife and travel industries are likely to suffer when a natural disaster strikes

Does certification work in emerging markets? evidence from the Indian IPO market

There is inconclusive evidence regarding the economic value of certification in the context of IPOs in developed markets. Using a natural experiment of regulator mandated IPO grading requirement, we examine the effects of third-party certification in the Indian IPO market. We summarize our empirical results below. First, underpricing is unaffected by the grading process. Second, stock price informativeness as proxied by idiosyncratic volatility increases significantly due to IPO grading process. Third, retail and institutional subscription levels are significantly positively associated with IPO grades after controlling for other certification mechanisms such as underwriter reputation, group affiliation, analyst recommendation and venture capital backing. Finally, using a pseudo grading process we conclude that IPO grades are not mechanically derivable from publicly available information. In a nutshell, we use our unique setting to examine the usefulness of certification in emerging markets with institutional voids

Dividend reductions and signaling in an imputation environment

In contrast to the double taxation system prevailing in the U.S., Australian firms operate within an imputation tax environment with respect to dividend payments. We argue that the dividend imputation tax system increases the signaling potential of dividend reductions and our empirical findings strongly support this view. We find that the size of the dividend reduction is related to the tax credit status of the dividend. Abnormal changes in profitability are negative in the year following dividend reductions and are negatively related to the dividend reduction; similar signaling effects are found in terms of price reactions. The significance levels for the relations between abnormal change in profitability and dividend reductions, and price reactions and dividend reductions are statistically significantly stronger for dividends with associated tax credits. Overall, our study conclusively demonstrates that dividend reductions in Australia have strong signaling power and, as such, our results are at variance with the results obtained in the U.S

The Complete Raman Spectrum in Relation to Infra-red Absorption. Part I-Pyridine and Acetic Acid

@IAC

Dialectics of tradition and memory in Black Panther

This is one of a series of film reviews of Black Panther (2018), directed by Ryan Coogler

The Raman spectra of aragonite, strontianite and witherite

The Raman spectra of the three crystals are recorded using the λ 2536·5 radiation of mercury and eleven new lines of low intensity are reported. These include the appearance in the cases of SrCO3 and BaCO3 of the line corresponding to the Raman-inactive mode of the free-ion, this line being of progressively diminishing intensity in the three cases owing to the structures progressively approaching that of hexagonal symmetry. The similarities and the differences observed in the three spectra are also correlated with the details of the crystal structures