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2750 items in total found

Working Papers | 2022

In Pursuit of Balance: Vicarious Liability Doctrine in the United Kingdom and India

M. P. Ram Mohan and Sai Muralidhar K

The Doctrine of Vicarious Liability is a unique exception to the principle of fault-based liability and holds persons liable for the actions of third parties. The recent verdicts in WM Morrison Supermarkets v Various Claimants (2020) and Various Claimants v Barclays Bank (2020) by the UK Supreme Court restricting the scope of vicarious liability through its interpretation of the akin to employment test as well as the close connection test deserves scrutiny. The Supreme Court apart from reaffirming the traditional distinction between independent contractors and employees also has limited the circumstances in which claims of vicarious liability can be upheld. Given that tort law in India is deeply rooted in the common law of the UK, it is unsurprising that principally vicarious liability in India and UK has evolved similarly. The paper analyses the various principled justifications behind the doctrine and focuses on the various tests such as the akin to employment test, course of employment test & close connection test which are used to impose liability. Further, it comprehensively examines the evolution of the doctrine in the UK and India, and analyses the varying approach taken by the judiciary in both countries against the backdrop of the socio-economic conditions of the workforce. Lastly, the paper identifies the difficulties that the doctrine may face in the future.

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Working Papers | 2022

Performance of quality factor in Indian Equity Market

Joshy Jacob, Pradeep K.P., and Jayanth R.Varma

We study the characteristics of Quality factor (QMJ) in India, which is the second largest emerging market. Dimensions of quality factor are impacted by the weaker enforcement of corporate governance norms in emerging markets. Diversion of revenues by promoters would result in poor profitability, while tunneling of profits would result in lower payout and lower growth. Therefore, investors are likely to attach greater significance to the quality dimensions in stock pricing. Consistent with this hypothesis, the Quality factor is even more important for asset pricing in India than in developed markets. The QMJ factor earns a four factor alpha of 0.92% per month, significantly outperforming the other widely employed factors, market, size, value and momentum factors. A long-only Quality factor earns an alpha of 0.69% per month. The alpha of quality factors is highly significant, judged by the thresholds recommended by Harvey, Liu, and Zhu (2016). The key drivers of the alpha are profitability and payout, which are both consistent with the tunnelling hypothesis. Besides the alpha, the low portfolio churn, lower risk, shorter drawdowns, and viability of long-only strategies restricted to large capitalization stocks suggest that portfolios tilted towards high-quality stocks are highly attractive to institutional and retail investors.

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Working Papers | 2022

Risk information - normal markets and the COVID-19 pandemic period

Pranjal Srivastava and Joshy Jacob

The paper investigates how the market infers changes in the firm-level discount rate (risk information) in normal and turbulent times. The study focuses on two key sources of risk information, earnings announcements of firms and changes in the market risk premium. We employ a recently proposed measure that limits the impact of event risk while estimating the forward-looking risk information from option prices. We find that both earnings announcements and the changes in market risk impact firm-level discount rates, but both sources exhibit a significant time variation. The impact of market risk changes is lower in favorable conditions and higher during crisis periods. Using COVID19 as an exogenous shock, we show that the influence of earnings announcements becomes insignificant during a crisis. The results suggest lower attention to firm-specific risk factors in times of a systemic crisis, in contrast to normal times.

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Working Papers | 2022

Arbitrage constraints and behaviour of volatility components: Evidence from a natural experiment

Pranjal Srivastava and Joshy Jacob

Short-selling constraints are known to impede information flow into the financial markets, particularly that of negative information. We employ “Regulation SHO” as a natural experiment to examine how the lowering of short sale constraints impacts the information flow. Specifically, we investigate whether large and small volatility jumps significantly change around the regulatory change, for the treated (Pilot) and control-group (non-Pilot) stocks. We find that large (small) jumps significantly decline (rise) as an outcome of the relaxation of short sale constraints, despite an increase in the variance of the Pilot stocks. The decline in the intensity of large jumps and the simultaneous increase in the intensity of small jumps suggest more efficient information flow into the market. Furthermore, the decline is larger for firms facing greater short-sale constraints, indicating that the impact of short-sale constraints are more pronounced for them. Implying that the change in the jump components is brought about by the easing of the short sale constraints, we also find that the decline in the large jump intensity is higher for firms with lower conservatism in information disclosure.

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Working Papers | 2022

Cyclically Adjusted PE ratio (CAPE) and Stock Market Characteristics in India

Joshy Jacob and K.P Pradeep

We estimate the Cyclically Adjusted PE ratio (CAPE) for equity indices in the
Indian market. We find the average CAPE ratio of the Indian market is lower than that of the US. Judging the market valuation level based on a long-term moving average of CAPE, we find that the CAPE has remained above the average since 2014. Prominent episodes where CAPE exceeds its average include the period before the 2008 Global Financial Crisis and the post-COVID-19 period. We find that a higher CAPE is associated with lower future returns for holding periods varying from one year to ten years, indicating the negative association between expected returns and CAPE. We also find that a higher CAPE is associated with a greater
demand for IPOs by investors and more optimistic earnings forecasts by analysts.
Net fundraising through equity significantly increases during periods of high CAPE
suggesting rational market timing by firms.

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Working Papers | 2022

Fishing in muddy waters: Mergers and acquisitions during uncertainty

Balagopal Gopalakrishnan, Joshy Jacob, and Jagriti Srivastava

Using the COVID-19 pandemic as an exogenous shock, we examine whether firms engage in opportunistic mergers and acquisitions during uncertainty. Particularly, we analyze the inorganic growth strategies of acquiring firms faced with disproportionate pandemic-induced opportunities using a cross-country deal-level data. We find a significant increase in the deal completion propensity and deal size, and a decrease in the deal completion time for acquirers that are more amenable to remote working. The effect is more pronounced when both the acquirer and the target are amenable to remote working. Our findings indicate that amenable firms, which were initially reluctant to engage in opportunistic acquisitions, engaged aggressively in the subsequent quarters with an abatement in pandemic-induced uncertainty. The study provides novel insights into the behaviour of acquisitive firms during the pandemic.

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Working Papers | 2022

India's Progressive Environmental Case Law: A Worthy Roadmap for Global Climate Change Litigation

M.P. Ram Mohan, Els Reynaers Kini, and Sriram Prasad

This paper explores how the long-standing tradition of common law countries such as India, which have acknowledged the fundamental right to a healthy and pollution free life for many decades, can assist Judges in other jurisdictions and inform global climate governance. More specifically, many other common law and civil law jurisdictions are faced for the first time with having to interpret and assess whether there is a fundamental right to a healthy and pollution free environment. This question forces them to review whether state inaction on climate change infringes this fundamental right. This paper examines how Indian courts have adjudicated environment and climate litigation. We further scrutinize the classification of cases as climate litigation in the Indian context to try and truly unearth Indian jurisprudence on environment and climate protection. The paper also examines the trends observable and the way forward for environment and climate litigation in India. We compare the four human rights based climate litigations before the European Court of Human Rights with Indian jurisprudence to understand transnational climate litigation better.

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Working Papers | 2022

Effects of Climatic Variations on Child Morbidity in Bundelkhand Region of India: A Panel Data Analysis

Vanita Singh, Vidhee Avashia, Manju Sharma Bhati, and Amit Garg

Morbidity and mortality related impacts of climate change are increasingly becoming a public health challenge especially among vulnerable groups. India has made significant progress in reducing its child mortality however there exists huge regional variations. This study focuses on Bundelkhand region, and analyses the association between climatic variables and morbidity in children. Cases reported to district health office from routine surveillance system between 2009 and 2015, and climate data are used in a fixed effects panel data regression model controlling for development indicators. The panel data regression finds that incidence of morbidity in children is significantly associated with temperature and rainfall. The significance of development indicators in reducing morbidity incidence is suggestive of the critical role of inter-sectoral coordination in achieving desired health outcomes

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Working Papers | 2022

Litigating Barbie: Trade Mark Infringement, Parody and Free Speech

M.P. Ram Mohan and Aditya Gupta

In the contemporary marketplace, trade marks are not mere monikers of origin. While often regarded as commercial symbols, trade marks sometimes become part of the commonplace vocabulary and are indelibly linked to expressing ideas and thoughts. In recent years, the dichotomy of expansive protection offered through the trade mark law and use of marks as part of expressive vocabulary has become increasingly controversial. One such trade mark which has amassed immense communicative strength is Mattel Incs Barbie. The mark has assumed an enduring prominence in contemporary language and has assumed the status of a cultural icon. The present study examines the regulation of expressive secondary uses of trade marks by employing Barbie as a case study. Comparatively analysing the treatment of the Barbie mark in India, the USA, and Canada, the authors underline an imperative need to adopt a legislative framework to protect the expressive and artistic secondary use of popular trade marks.

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Working Papers | 2022

Towards an Integrated Framework for Resolving Ethical Dilemmas

Manan Gandhi and Vishal Gupta

The present paper proposes an integrated approach to resolving life's ethical dilemmas. First, it refines the set of fundamental ethical values, which will help discard the confirmed unethical choices and exhaustively contain all the different prospects of acts that can be deemed ethical from different viewpoint. Further, it comprehensively enunciates the different types of ethical dilemmas that could be generated out of the conflict between the elemental values of the set of fundamental ethical values. Finally, it contributes a framework to resolve the dilemma that caters to the different possibilities of conflict generation and exhaustively settles them.

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