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This study examines individual ambiguity attitudes alone and in groups by leveraging the descriptive model of anchoring and adjustment on decision-making under ambiguity. The study extends Ellsberg's probability ambiguity to outcome ambiguity and examines decisions made under both ambiguities, at different likelihood levels and under the domain of gains and losses.

The methodology selected for this study is a two-stage within-subject lab experiment, with participants from different Indian universities. Each participant made 12 lottery decisions at the individual level and at individuals in the group level.

The results show that ambiguity attitudes are not universal in nature. Ambiguity seeking as a dominant choice was observed at both the individual level and at individual in the group level. However, the magnitude of ambiguity seeking or ambiguity aversion contingent upon the domain of gains and losses differed widely across the individual level and at individuals in the group level.

The study enables to contribute toward giving a robust descriptive explanation for individual behavior in real-world applications of finance. It aims to provide direction for theoretical normative models to accommodate heterogeneity of ambiguity attitudes.

The study is novel as it examines a two-dimensional approach by representing ambiguity in probability and in outcomes. It also analyzes whether decisions under ambiguity vary when individuals make decisions alone and when they make it in groups.

This paper aims to study the corporate governance practices followed by the listed companies in India to find out if industry and business group affiliation of firms influence their corporate governance practices.

The authors have created a corporate governance index for India using 15 of the variables used in past research. Hierarchical regression has been used in the study to control for possible inter-firm correlation in governance scores.

Using principal component analysis, the authors derive five factors for the corporate governance index – board composition, shareholder responsibility, ownership, responsible board behavior and fair executive compensation. Using the random intercept mixed-effects model, the authors find that corporate governance behaviors of firms affiliated to business groups are more similar within business groups than within industries.

Regulatory authorities generally target individual firms to enforce good corporate governance practices. As companies affiliated with the same business group exhibit similar governance practices, regulators can also set norms for business groups in addition to individual firms.

Scant research has studied the corporate governance behavior of firms affiliated with business groups. By making business groups (and industries) the unit of analysis, the authors have studied the corporate governance behavior of firms as a cluster in the context of an emerging country, India.

Many studies have shown that from a theoretical and empirical point of view, downside risk-based measures of risk are better than the traditional ones. Despite academic appeal and practical implications, downside risk has not been thoroughly examined in markets outside developed country markets. Using downside beta as a measure of downside risk, this study examines the relationship between downside beta and stock returns in Indian equity market, an emerging market with unique investor, asset and market characteristics.

This is an empirical study done by using ranked portfolio return analysis and regression analysis methodologies.

The study results show that downside risk, as measured by downside beta, is distinctly priced in the Indian equity market. There is a direct positive relationship between downside beta and contemporaneous realized returns, indicating a premium for downside risk. Downside risk carries a higher weightage than upside potential in the aggregate return of the stock portfolios. Downside beta is a better measure of systematic risk than conventional market beta and downside coskewness.

The empirical results support the adoption of downside beta in practice and provide a case for replacing traditional beta with downside beta in asset pricing applications, trading and investment strategies, and capital allocation decision-making.

This is one of the first in-depth studies examining downside beta in Indian equity markets using a broad sample of individual stock returns covering a wide time range of 22 years. To the best of our knowledge, this study is the first one to compare downside beta and downside coskewness using individual stock data from the Indian equity market.

Fear grips stock markets when a pandemic like COVID-19 strikes, severely affecting stock prices. However, fundamental value drivers of companies do not change drastically during pandemics. The sensitivity of firms' cash flows to lockdowns during pandemics depends on their cost structure. This paper develops a financial model incorporating information about value drivers and lockdown sensitivity of companies to find the enterprise value.

The authors develop a financial model that estimates the effects of COVID-19 on enterprise value and helps to identify wrongly valued stocks. The authors apply the model to five Indian stocks from five different industries to study how firms belonging to various sectors get affected differently in this pandemic.

Companies belonging to civil aviation and retail sectors get more affected by COVID-19 compared to those in movie exhibition, automobile and hotel industries. The cost structure of the latter category of firms reduces their cash flow effect.

The model can be used by practitioners to understand any pandemic's effect on stock prices. Also, it explains how firms having different cost structures get affected by any crisis and help investors in taking appropriate buy/sell decisions.

The study has two contributions: first, the authors develop a financial model to estimate the effect of COVID-19 on the enterprise value. Second, contrary to popular perception, the authors find companies belonging to movie exhibition, hotel and automobile industries do not get that severely affected.

The purpose of this paper is to analyse the impact of Indian investor sentiments on contemporaneous stock returns of Bombay Stock Exchange, National Stock Exchange and various sectoral indices in India by developing a sentiment index.

The study uses principal component analysis to develop a sentiment index as a proxy for Indian stock market sentiments over a time frame from April 1996 to January 2017. It uses an exploratory approach to identify relevant proxies in building a sentiment index using indirect market measures and macro variables of Indian and US markets.

The study finds that there is a significant positive correlation between the sentiment index and stock index returns. Sectors which are more dependent on institutional fund flows show a significant impact of the change in sentiments on their respective sectoral indices.

The study has used data at a monthly frequency. Analysing higher frequency data can explain short-term temporal dynamics between sentiments and returns better. Further studies can be done to explore whether sentiments can be used to predict stock returns.

The results imply that one can develop profitable trading strategies by investing in sectors like metals and capital goods, which are more susceptible to generate positive returns when the sentiment index is high.

The study supplements the existing literature on the impact of investor sentiments on contemporaneous stock returns in the context of a developing market. It identifies relevant proxies of investor sentiments for the Indian stock market.

The study aims to examine corporate governance issues in India and establish the relationship between corporate governance and financial performance.

The sample comprises 141 companies belonging to the “A” group stocks listed in the Mumbai Stock Exchange of India. Considering the institutional uniqueness in India, a composite measure of corporate governance is developed comprising three indicators – legal, board and proactive indicators. Data on the three indicators and financial performance were procured from secondary sources. In the step-wise multiple regression analysis, the influence of these three indicators and the composite measure of corporate governance was examined on firm performance after controlling the confounding effects of firm size.

The board and the proactive indicators influence the firm performance significantly whereas legal compliance indicator does not do so. The composite corporate governance measure is a good predictor of firm performance.

This study has two contributions: one, it proposes a composite measure of corporate governance considering the unique institutional characteristics of the Indian economy. Two, the study establishes the predictability of the new measure of corporate governance on firm performance as a tool to boost investors' confidence and financial health of firms.

It is a well known problem the interactions between the market value of cash flows and the discount rate (usually the weighted average cost of capital, WACC) to calculate that value. This is mentioned in almost all text books in corporate finance. However, the solution adopted by most authors is to assume a constant leverage D%, and hence assume that the leverage gives raise to an optimal capital structure and the discount rate is constant. On the other hand, most authors use the definition of the Ke, the cost of leveraged equity for perpetuities even if the planning horizon is finite. Among these authors we find the work of Wood and Leitch W&L 2004. In this article we wish to analyse the claim made by W&L 2004 in the sense to have found an iterative solution to the problem of circularity that results in a “near” matching with the Adjusted Present Value APV, proposed by Myers, 1974. They use as the basic principle the fact that there is a “near” constant relation between Ke the cost of equity and Kd the cost of debt. They consider as well that the cost of debt Kd is not constant and changes proportionately with the leverage D%. We propose a very simple and precise approach to solve the above mentioned circularity problem.