Title: Investigating the myths associated with IPOs of small and medium enterprises: the case of India

Authors: Geet Kalra; Nirali Kansara

Addresses: Department of Economics and Finance, Birla Institute of Technology and Science, 6165, New Academic Block, Pilani, Rajasthan, India ' Department of Economics and Finance, Birla Institute of Technology and Science, 6165, New Academic Block, Pilani, Rajasthan, India

Abstract: Small and medium sized enterprises play a major role in the sustainable development of a nation, creating employment opportunities and enhancing trade opportunities. India, being a developing nation has most of its enterprises operating at a small/medium scale. Raising capital through public offerings plays a crucial role in the beginning of the life cycle of small scale enterprises. However, due to lesser liquidity, critical size, informational asymmetry and lack of suitable markets, these SMEs suffer an acute disadvantage. There has been an increase in the number of SME-IPOs in the past five years. This paper aims at studying the effect of different IPO variables such as issue size, issue price, under-pricing/overpricing, percentage net, etc. on the short and long term after-returns of the SMEs. After critical analysis, it has been found that IPO variables do not contribute significantly to the short term returns for SME because of lesser liquidity in the stock markets.

Keywords: development; long term after returns; small and medium sized enterprises; SMEs; under-pricing; short term returns; IPO; India.

DOI: 10.1504/IJICBM.2017.084365

International Journal of Indian Culture and Business Management, 2017 Vol.14 No.4, pp.393 - 405

Received: 08 Feb 2016
Accepted: 05 Jun 2016
Published online: 06 Jun 2017 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article