Do Female Directors Signal Indian SME IPOs Quality? Evidence From a Quantile Regression Approach

Abstract

The purpose of this article is to examine the influence of female directors on the underpricing of small and medium enterprise (SME) initial public offerings (IPOs) in an emerging country like India which is relatively a fruitful setting to investigate. The research in relatively underexplored area is undertaken using a sample of 403 SME IPOs issued between 2012 and 2018. Ordinary least square (OLS) regression (mean regression) and quantile regression (QR, median regression) has been used to examine the signaling role of female directors on listing day performance of Indian SME IPOs. The results unveil that presence of female directors on IPO board reduces the underpricing. However, the negative relationship lacks statistical association between the variables. Similar results have been obtained when proportion of female directors instead of female dummies is used to gauge the impact on underpricing. The study highlights the need to increase the proportion of women directors on board to break the ‘glass ceiling’ and capitalize their talent for improving IPO performance. The extant research investigating the impact of female directors has largely been concentrated on larger companies in developed countries. Thus, the present research contributes to the literature by examining its influence in context of IPOs of smaller firms which needs effective signals to communicate true quality to investors thereby gaining societal legitimacy.

Gendering Corporate Boards and Conditional Effectiveness of Board Processes: Insights from a Sub-Saharan African Country

“…The empirical results show that women on corporate boards contribute to effective board processes and outcomes when their proposed ideas during board meetings are accepted by other board members, implemented by the management and impact positively on organizations' outcomes such as enhanced financial, product and staff outcomes. This finding seems to give credence to previous results by Srinidhi et al (2020) and Arioglu (2020) but inconsistent with prior studies that found negative outcomes (Comi et al, 2020;Martinez-Jimenez et al, 2020), or no significant impact (e.g., Arora & Singh, 2020;Zajiji et al, 2020). This result, from the perspectives of the resource dependence and resource-based theories, suggests that female directors of organizations are vital resources because they are sources of wise counsel, useful ideas and advice (Hillman & Dalziel, 2003) for making positive organizational changes or impacts.…”

“…Empirically, various studies have examined the influence of female directors or gender diversity on the effectiveness of board processes and organizational outcomes. While some found positive results (e.g., Arioglu, 2020;Li & Li, 2020;Kilic & Kuzey, 2016;Moussa, 2019;Song et al, 2020), others found negative outcomes (Comi et al, 2020;Martinez-Jimenez et al, 2020;Yang et al, 2019) or no significant impact (e.g., Arora & Singh, 2020;Zajiji et al, 2020). This suggests that there is still a lack of consensus in the extant research on the contribution of women on corporate boards to the effectiveness of board processes and organizational effectiveness.…”

Timing the transition: gender diversity’s role in family IPOs

“…Our results align with previous studies that highlight the negative effects (e.g. Reutzel and Belsito, 2015) or insignificance (Arora and Singh, 2023;Singh et al, 2023) of gender on IPO performance.…”

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

“…In case of underpricing, the dependent variable is initial return of IPOs, which is computed as the percentage difference between the issue price and closing price on the first day of listing (Arora & Singh, 2020; Badru et al, 2019; Certo et al, 2001; Handa & Singh, 2017). With regard to computation of long-run returns, buy-and-hold abnormal returns (BHARs), as followed in various international studies, have been used as a proxy as mentioned above (Agathee et al, 2014; Ritter, 1991).…”