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

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  • Geet Kalra
  • Nirali Kansara

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.

Suggested Citation

  • Geet Kalra & Nirali Kansara, 2017. "Investigating the myths associated with IPOs of small and medium enterprises: the case of India," International Journal of Indian Culture and Business Management, Inderscience Enterprises Ltd, vol. 14(4), pages 393-405.
    • Handle: RePEc:ids:ijicbm:v:14:y:2017:i:4:p:393-405
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    Cited by:

    1. Kedar Mukund Phadke & Manoj S Kamat, 2019. "Does IPO Grading Impact Price Effciency in India?," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 11(2), pages 79-90, December.

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