The long-run performance of SME IPOs in India: empirical evidence from Indian stock market

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nischay Arora ◽  
Balwinder Singh
Keyword(s):  
Initial Public Offerings ◽  
Small And Medium Enterprises ◽  
Abnormal Returns ◽  
Least Square ◽  
Calendar Time ◽  
Content Type ◽  
Event Time ◽  
Long Run ◽  
Ordinary Least Square Regression ◽  
Medium Enterprises

Purpose The purpose of this paper is to study the pattern of long-run performance of small and medium enterprises (SMEs) initial public offerings (IPOs) and examine the firm- and issue-related determinants of long-run performance of SME IPOs in India. Design/methodology/approach The 3 6, 9 and 12 months share returns of Indian SME IPOs is studied using event time methodologies, i.e. buy and hold returns, cumulative abnormal returns and wealth relatives on a sample of 375 SME IPOs issued during February 2012 to May 2018. Additionally, ordinary least square regression has been used to investigate the determinants of long-run performance of SME IPOs on a reduced sample of 104 because of non-availability of price observations. Findings The findings reveal that Indian SME IPOs exhibit long-run overperformance contradicting the international evidences of underperformance, and this overperformance is significantly evident using buy and hold abnormal return (BHAR). Furthermore, based on the divergence of opinion hypothesis, fads theory and windows of opportunity hypothesis, the results reveal that on one hand, issue size and oversubscription negatively affect BHAR, while on the other hand, auditor reputation, underwriter reputation, hot market, underpricing, inverse of issue price, profits prior to listing positively affect long-run performance. However, firm age, firm size, debt equity ratio, volatility and long-run performance computed through BHAR lacks significant relationship. Research limitations/implications The study relied on event time methodology of measuring aftermarket performance of one year because of the limited availability of price offerings. Hence, the study could be extended to analyze aftermarket returns over a period of three to five years to enable reaching the vivid conclusions. Calendar time methodology may also be used to compute abnormal returns. Practical implications The results based on the study provides an implication to the investors by providing them an opportunity to bank higher long-run returns by engaging in active and timely trading strategies. Nevertheless, the results also show that investors should be cautioned while taking investment decisions. Originality/value The study contributes to rising body of international literature by analyzing the larger and recent sample of IPOs issued from 2012 to 2018 listed on SME exchange.

Does franchising matter on IPO performance?

2017 ◽  
Vol 29 (10) ◽  
pp. 2535-2555 ◽  
Author(s):  
Ozgur Ozdemir ◽  
Murat Kizildag
Keyword(s):  
Initial Public Offering ◽  
Abnormal Returns ◽  
Restaurant Industry ◽  
Least Square ◽  
Content Type ◽  
Ipo Performance ◽  
Long Run ◽  
Ordinary Least Square Regression ◽  
Using Data ◽  
Public Offering

Purpose This paper has two main purposes. First, this paper aims to examine whether pre-initial public offering (IPO) franchising activity of issuing firms is priced in the financial markets and results in pricing differential between franchising and non-franchising firms at the time of IPO. Second, the paper aims to find out whether firms with pre-IPO franchising achieve better post-IPO stock performance compared to non-franchising firms. Design/methodology/approach To test research hypotheses, empirical models were developed and tested through ordinary least square regression analysis. Several data sources were used including Thomson One Banker’s SDC database, Compustat/CRSP and IPO prospectuses. Findings The paper provides further insights to the underpricing phenomenon surrounding IPOs and long-run performance of IPO shares subsequent to listing. Particularly, the study reveals that franchising firms underprice their issues to a higher degree compared to non-franchising firms, and franchising positively affects the post-IPO benchmark adjusted cumulative abnormal returns (CARs) over a three-year observation period. Research limitations/implications Because the study tests the proposed hypotheses using data only from the restaurant industry, the research results may lack generalizability. Therefore, researchers are encouraged to test similar hypotheses using larger sample sizes from other industries. Practical implications The study’s findings have important implications both for IPO issuers in positioning their offering and for IPO investors in comparing IPO stocks and forming long-run portfolios. Originality/value This paper contributes both to the IPO and franchising literatures by providing primary insights about how investors perceive pre-IPO franchising and incorporate their perception into their pricing at an IPO.

Exploring the barriers to SMEs’ open innovation adoption in Ghana

2020 ◽  
Vol 12 (1) ◽  
pp. 21-51 ◽  
Author(s):  
Stephen Oduro
Keyword(s):  
Open Innovation ◽  
Small And Medium Enterprises ◽  
Emerging Market ◽  
Partial Least Square ◽  
Least Square ◽  
Research Approach ◽  
Content Type ◽  
Survey Interviews ◽  
The Right ◽  
Medium Enterprises

Purpose Open innovation (OI) is now recognized as one essential innovation paradigm to help small and medium enterprises (SMEs) quell their liability of newness and smallness. However, little is known about SMEs’ OI barriers, particularly in emerging economies. Drawing on both network and transaction cost theory, this study aims to explore the barriers to SMEs’ OI adoption in Ghana. Design/methodology/approach The study adopted an exploratory sequential research design that involved both qualitative and quantitative study methodologies. A total of 644 responses (21 survey interviews and 623 usable questionnaires) across SMEs in Ghana were collected and analyzed in the study. A qualitative analysis involving quotations extracted from the respondent’s statement was used to present the qualitative findings, whereas SEM-partial least square, co-variance approach, was used to analyze the formulated hypotheses. Findings Results show that significant barriers to SMEs OI adoption are collaboration barriers – difficulty in finding the right partners and problems of cooperation and coordination of operational functions; organizational barriers – lack of flexible internal procedures and structures and organizational inertia; and strategic barriers – opportunistic behavior of partners and lack of strategic and resource fit. Contrary to existing findings, financial and knowledge barriers were disclosed as driving factors, rather than barriers, to SMEs’ OI adoption; these findings challenge conventional thinking about SMEs’ major OI barriers. Research limitations/implications This study focuses on only SMEs in one emerging economy, namely, Ghana, which may limit the generalization of the findings. Practical implications The findings of this study, while limited to Ghana, offer useful insights to SMEs managers, development practitioners and policymakers respecting the overall importance of the OI model, its associated impediments, as well as the strategic measures to quell those barriers. Originality/value This study provides a pioneering empirical investigation into the main barriers to SMEs’ OI adoption in a less-explored emerging market context through a mixed research approach.

Explaining business excellence in Chinese firms: how does institutional relatedness matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Haifeng Yan ◽  
Qihu Wang ◽  
Yi Ke ◽  
Juan Wang
Keyword(s):  
Initial Public Offerings ◽  
Least Square ◽  
Foreign Firms ◽  
Chinese Firms ◽  
Content Type ◽  
Public Offerings ◽  
Positive Effects ◽  
Business Excellence ◽  
Specific Factors ◽  
Ordinary Least Square Regression

Purpose It is widely accepted that business excellence comes from firm-specific factors. However, it is still unclear how institutional relatedness – the degree of embeddedness with the dominant institutions that confer resources and legitimacy, influences the business excellence of the firm. The purpose of this study is to explore the influence of three kinds of institutional relatedness, i.e. home government ties, initial public offerings (IPOs) and alliances with foreign firms, on the business excellence of Chinese firms. Design/methodology/approach This study uses a sample of firms enlisted on the “Most Respected Companies” rank in China during the period 2002–2015 and their paired firms who are absent from the list, by means of ordinary least square regression estimator, to explore the relationship between institutional relatedness and business excellence. Findings The empirical results suggest that IPOs and alliances with foreign firms significantly strengthen firms’ business excellence. Furthermore, home government ties have positive effects on outbound IPOs and alliances with foreign firms but hinder business excellence. Originality/value This study extends the business excellence literature by characterizing institutional rather than firm-specific factors from an institution-based view. It also enriches research on outcomes of institutional relatedness through investigating empirically its impact on business excellence. The findings provide new insights into the dual role of home government ties in achieving business excellence.

EFFECT OF MICRO LENDING RATE ON SMES GROWTH IN NIGERIA

2021 ◽  
Vol 9 (1) ◽  
pp. 62-78
Author(s):  
Adegbite Adewale ◽  
◽  
Alli Ismail ◽  
Keyword(s):  
Interest Rate ◽  
Small And Medium Enterprises ◽  
Negative Relationship ◽  
Sampling Technique ◽  
Least Square ◽  
Primary Data ◽  
Ogun State ◽  
Significant Negative Relationship ◽  
Ordinary Least Square Regression ◽  
Medium Enterprises

Small and medium enterprises are acknowledged as the lubricants that wheel the socio-economic development of a nation yet their growth has been stunted by harsh fiscal and monetary policies. This study seeks to investigate the effect of micro financing interest rate on small and medium scale enterprises growth in Lagos and Ogun State, Nigeria. Primary data was employed using structured self-administered questionnaire with five-point Likert scale. The study adopted a descriptive survey research design to give an accurate description of the research variables. Yaro Yamane’s sampling technique was used to select four hundred (400) SMEs from the total population of thirteen thousand four hundred and fifty-seven (13,457) in both Lagos and Ogun States, while stratified and proportionate sampling methods are used to determine the sample size of three hundred and fourty eight (348) SMEs in Lagos state and fifty-two (52) in Ogun state. Ordinary Least Square Regression (OLS) was used to estimate the regression. In the study, one hypothesis was formulated and tested. The results from the hypothesis tested revealed that a significant negative relationship exist between micro finance interest rate and SMEs growth in Nigeria at 5 per cent level (tc= -1.570731; p= 0.0009). Based on the finding, the study concluded that significant negative relationship exist between micro finance interest rate and small & medium enterprises growth in Nigeria. The study recommends that microfinance banks should charge moderate interest rate to SMEs without stringent collateral requirements to boosts SMEs growth in Nigeria.

Gender diversity and its impact on high-tech SMEs’ organizational leadership

2018 ◽  
Vol 33 (6) ◽  
pp. 499-523 ◽  
Author(s):  
Monica Garcia-Solarte ◽  
Domingo Garcia-Perez de Lema ◽  
Antonia Madrid-Guijarro
Keyword(s):  
Organizational Leadership ◽  
Small And Medium Enterprises ◽  
Gender Diversity ◽  
Least Square ◽  
High Tech ◽  
Content Type ◽  
Ordinary Least Square ◽  
The Board Of Directors ◽  
Questionnaire Form ◽  
Medium Enterprises

Purpose This study aims to empirically identify the relationship between gender diversity and organizational leadership. Design/methodology/approach A multifactor questionnaire, Form 6-S, developed by Bass and Avolio (1992), is used to measure leadership. The results are derived from univariate and multivariate analyses conducted through ordinary least square linear regression. This study uses a base consisting of 142 small and medium enterprises in Cali (Colombia); men manage 111 of which, whereas women manage 31. The data came from a project performed by the Humanism and Management research group of the Administration Sciences Department of Valley University (Universidad del Valle). Fieldwork was conducted between November 2013 and April 2014. Findings The results show that companies with greater gender diversity (mostly women on the board of directors and in management) develop a transformational organizational style orientated towards organizational change through the transformation of followers. Originality/value There is no previous study combining these variables in Colombian context.

scholarly journals Long-Run Pricing Performance of Initial Public Offerings (IPOs) in Pakistan

2021 ◽  
Vol 2 (2) ◽  
pp. 97-140
Author(s):  
Muhammad Zubair Mumtaz ◽  
Ather Maqsood Ahmed
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Activity Period ◽  
Risk Level ◽  
Calendar Time ◽  
Public Offerings ◽  
Explanatory Variables ◽  
Ipo Performance ◽  
Long Run

This study investigates the long-run pricing performance of 90 IPOs listed on the Karachi Stock Exchange from 1995 to 2010. This study finds evidence that IPOs show signs of underpricing and underperform over three years after listing; however, the observed pattern of underperformance is not always statistically significant. The equal-weighted buy-and-hold abnormal returns and calendar-time analysis confirm the significance of the IPO underperformance over the three year period after listing on the exchange. Extreme bounds analysis is used to test the sensitivity and robustness of twenty six explanatory variables in determining the IPO underperformance. The results reveal that the robust predictors of IPO underperformance include underpricing, financial leverage, age of the firm and oversubscription for buy-and-hold return calculations and underpricing, hot activity period, post issue promoters’ holding, issue proceeds and aftermarket risk level for cumulative abnormal return calculations. Moreover, the fads hypothesis and the window of opportunity hypothesis are applied to explain long-run IPO performance.

Do Prestigious Underwriters Shape the Performance of SME IPOs in India?

2020 ◽  
pp. 097215092096321
Author(s):  
Nischay Arora ◽  
Balwinder Singh
Keyword(s):  
Initial Public Offerings ◽  
Stock Exchange ◽  
Least Square ◽  
Public Offerings ◽  
Least Square Regression ◽  
Long Run ◽  
Medium Enterprise ◽  
Underwriter Reputation ◽  
Ordinary Least Square Regression ◽  
The Impact

The present article aims to examine the impact of underwriter reputation on underpricing and long-run returns of small- and medium-sized enterprise (SME) initial public offerings (IPOs) over a 12-month period in an emerging country like India on a sample of 403 IPOs issued from 2012 to 2018 and subsequently listed on Bombay Stock Exchange (BSE) small and medium enterprise (SME) platform and National Stock Exchange (NSE) EMERGE. However, the migration of 27 SME IPO companies to main platform has resulted in reduced sample size of 376 IPOs for measuring long-run performance. The current study has utilized ordinary least square regression technique to investigate the concerned relationship. The robustness of the findings has been further ensured by checking for endogeneity bias using two-stage least square regression (2SLS). The results unveil that while underwriter reputation positively influences underpricing of SME IPOs, it has no significant impact on their long-run performance. This analysis may provide some meaningful information for policymakers responsible for reforms of Indian equity market. For SME issuers, the findings may provide some insights on the importance of hiring reputed underwriters in IPO process. The results may further assist the investors in improving their equity valuation and taking informed investment decisions.

Crisis situations: how should micro, small and medium enterprises handle them with a long term view?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Magdolna Csath
Keyword(s):  
Intellectual Capital ◽  
Service Providers ◽  
Small And Medium Enterprises ◽  
Value Added ◽  
Business Success ◽  
Content Type ◽  
Long Run ◽  
Working Age ◽  
Medium Enterprises ◽  
Crisis Situations

Purpose Micro, Small and Medium Enterprises (MSMEs) are the backbone of economies. They employ about 70 percent of the working age population and produce on average about half of new value-added. Self-employed micro’s are a special segment of the MSME population. They are either the typical service providers or the new start-ups, later becoming rapidly growing gazelles. It is therefore very important that the majority of these businesses survive crises. There are plenty of suggestions about what governments should do to help, but what should MSMEs themselves do, not only for survival but also for a successful future? This is the topic of this article. Design/Methodology/Approach The article is based on international research findings and the long-time professional experience of the author on the operations of the MSME sector in an international context. Findings MSMEs can survive and even thrive on challenges created by sudden crisis situations, like a pandemic, if they have a proactive managerial mentality and also diverse professional knowledge, often called intellectual capital. There are well-known, but perhaps now neglected, management techniques which can support this combination of short and long run orientation, including future building aspirations. Combined they can enhance the intellectual capital stock of business, serving as a springboard for future sustainable success. Originality/value Crisis situations do not happen – fortunately - too often. Therefore. experiments about how to handle them, especially in the MSME sector are not extensively available. This paper suggests a tool-set which might be especially useful not only for handling crisis situations, but also for improving chances for lasting business success.

Importance of commitment in encouraging employees’ innovative behaviour

2016 ◽  
Vol 8 (1) ◽  
pp. 70-83 ◽  
Author(s):  
Fatemeh Hakimian ◽  
Hadi Farid ◽  
Mohd Nazari Ismail ◽  
Pradeep Kumar Nair
Keyword(s):  
Small And Medium Enterprises ◽  
Business Environment ◽  
Partial Least Square ◽  
Least Square ◽  
Innovative Behavior ◽  
Content Type ◽  
Theoretical Contribution ◽  
Innovative Behaviour ◽  
Medium Enterprises ◽  
The Relationship

Purpose – The extremely competitive and globalized business environment directs organizations to rely on human capital to be innovative. Committed employees are needed for organizations to foster innovative behaviors. The purpose of this paper is to examine the relationship between three forms of commitment and employees’ innovative behavior. Design/methodology/approach – Adopted questionnaire from previous studies were distributed among employees of Malaysian Small and Medium Enterprises. A total of 219 questionnaires were analyzed via partial least square. Findings – Statistical results revealed significant relationships between affective and normative commitment and employees’ innovative behavior. Originality/value – This study offers a theoretical contribution by adding an insight into the relationship between commitment and innovative behavior. The study also provides a practical guideline for managers of Malaysian SMEs who aim to increase innovative behavior among employees by considering their level of commitment.

Do the calendar anomalies still exist? Evidence from Indian currency market

2016 ◽  
Vol 42 (2) ◽  
pp. 136-150 ◽  
Author(s):  
Satish Kumar ◽  
Rajesh Pathak
Keyword(s):  
Least Square ◽  
January Effect ◽  
Currency Markets ◽  
Content Type ◽  
Currency Market ◽  
Before And After ◽  
Calendar Anomalies ◽  
Ordinary Least Square Regression ◽  
The 2008 Financial Crisis ◽  
Using Data

Purpose – The purpose of this paper is to examine the presence of the day-of-the-week (DOW) and January effect in the Indian currency market for selected currency pairs; USD-(Indian rupee) INR, EUR-INR, GBP-INR and JPY-INR, from January, 1999 to December, 2014. Design/methodology/approach – Ordinary least square regression analysis is used to examine the presence of DOW and January effect to test the efficiency of the Indian currency market. The sample period is later divided into two sub-periods, that is, pre- and post-2008 to capture the behavior of returns before and after the 2008 financial crisis. Further, the authors also use the non-parametric technique, the Kruskal-Wallis test, to provide robustness check for the results. Findings – The results indicate that the returns during Monday to Wednesday are positive and higher than the returns on Thursday and Friday which show negative returns. The returns during January are found to be higher than the returns during rest of the year. Further, all currencies exhibit significant DOW and January effects in pre-crisis period, however, post-crisis; these effects disappear for all currencies indicating that the markets have become more efficient in the later time. The findings can be further attributed to the increased intervention in the forex markets by the Reserve Bank of India after the crisis. Practical implications – The results have important implications for both traders and investors. The findings suggest that the investors might not be able to earn excess profits by timing their positions in some particular currencies taking the advantage of DOW or January effect which in turn indicates that the currency markets have become more efficient with time. The results are in conformity with those reported for the developed markets. The results might be appealing to the practitioners as well in a way that they can consider the state of financial market for financial decision making. Originality/value – The authors provide the first study to examine the calendar anomalies (DOW and January effect) across a range of emerging currencies using 16 years of data from January, 1999 to December, 2014. To the best of the authors’ knowledge, no study has yet examined these calendar anomalies in the currency markets using data which covers two important periods, pre-2008 and post-2008.

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