Foreign Institutional Investors and Firm Characteristics - A Study of Indian Firms

The study analyses the inter-firm differences in the foreign institutional investors' portfolio investment with respect to the firm characteristics for a sample of Indian firms. The firm specific characteristics studied are promoters' shareholding, firm size, systematic risk, price to book ratio, return on equity, dividend yield and export sales. The analysis shows that foreign institutional investors prefer large firms and firms with less promoters' shareholding. Measuring foreign institutional investors' shareholding as a percentage of the total outstanding shares and as a percentage of the total outstanding shares available for investment by the non-promoters category does not alter the results