Impact of SME Listing on Capital Structure Decisions

Kulkarni, Prasanna; Chirputkar, Abhijit

doi:10.1016/s2212-5671(14)00210-x

Cited by 16 publications

(12 citation statements)

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“…Srinivas (2013) conducted a study on SMEs from 2007 to 2011 and concluded that they use more owned funds than borrowed funds. As per Kulkarni & Chirputkar (2014), the listing of SMEs should promote fundraising. Kumar & Rao (2016) studied the financing pattern of SMEs for a period between 2006 and 2013 and observed that SMEs rely more on short-term debt.…”

Section: Review Of Literaturementioning

confidence: 99%

Financial Preferences of Listed SMEs in India: An Empirical Study

Verma

Shome

Patel

2021

Journal of Small Business Strategy

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Small and Medium-sized Enterprises (SMEs) play a very significant role in boosting sustainable economic growth and development of any country. The present study examines various firm-specific determinants that have an impact on the financing choice of the listed Indian SMEs. It also studied the financing practices of the listed SMEs in India and tried to find out if their financing pattern follows the established theories of Corporate Finance. The study selected 113 SMEs listed on the NSE Emerge Exchange for the period between 2014 and 2018. To examine the problem, empirical analysis is done with the help of panel data regression. The study finds that for meeting financial requirements of listed SMEs, they prefer current liabilities first, then total reserves, thereafter short-term borrowings and lastly the long-term borrowings. Among the independent variables chosen based on an extensive literature survey, most of them are statistically significant but are depicting lower explanatory power. Hence, it leads to the possibility of some other firm-specific factors or macroeconomic factors being more relevant in deciding the listed firm’s financing choices. The study concludes that no single theory like Pecking Order Theory (POT) or Trade-Off Theory (TOT) can explain the financing behaviour of listed SMEs completely. It contributes to the extant literature on listed SMEs by attempting to examine the impact of listing on the financing patterns of the SMEs.

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Section: Review Of Literaturementioning

confidence: 99%

Financial Preferences of Listed SMEs in India: An Empirical Study

Verma

Shome

Patel

2021

Journal of Small Business Strategy

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“…Firms were found using more owned funds than borrowed funds. Kulkarni and Chirputkar (2014) stated that SME listing is expected to help SMEs raise funds for their expansion and growth. Kumar and Rao (2016) in their study examined the financing pattern of SMEs between 2006 and 2013 and concluded that SMEs depend more on short-term debt in the form of bank loan, and that trade credit is the most widely used source of finance.…”

Section: Literature Reviewmentioning

confidence: 99%

Financing preference of listed small and medium enterprises (SMEs): evidence from NSE Emerge Platform in India

Verma¹,

Shome

Patel

2020

JEEE

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Purpose The study aims to empirically evaluate the effect of internal factors of small and medium enterprises (SMEs) on their financing choices. It also examines the financing practices of listed SMEs in India and finds out whether the financing patterns of listed SMEs follow the established theories of corporate finance. Design/methodology/approach For this study, 113 SMEs listed on National Stock Exchange Emerge Platform are considered for the period from 2014 to 2018. Panel data regression is applied. The control group has been identified by using the propensity score matching approach. Qualitative information has been collected from the bank officials and the promoters of listed SMEs. Findings The study reveals that for meeting financial requirements, listed SMEs initially create current liabilities followed by usage of total reserves. Thereafter, they look for short- and long-term borrowings for further funding options. No significant change is observed in the financing pattern of listed SMEs as compared to their non-listed matched firms. The study suggests that no single theory, including pecking order theory or trade-off theory, could explain the behaviour of SMEs financing completely. Research limitations/implications The financing pattern of SMEs can be of great interest to various stakeholders such as government and lenders. As no significant boost is observed in debt financing post listing, this aspect needs to be evaluated by the stakeholders. Originality/value This study is significantly different from the existing studies, as it attempts to evaluate the impact of listing on overall financing pattern of SMEs in India. This is also one of the very few studies that uses both quantitative and qualitative information to examine the same.

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“…In addition, the listing provides a notable status (Singh and Pillai, 2021) to SMEs and shifts their exposure to market competition ( MC ). It is expected that such changes due to the listing of SMEs would impact the valuation of such firms (Dhamija and Arora, 2017; Kulkarni and Chirputkar, 2014). The current study draws motivation from recent advancements in the SMEs’ landscape in India and their expected effects.…”

Section: Introductionmentioning

confidence: 99%

Impact of promoters’ ownership and competition on firm’s value: a study of listed SMEs

Singh

Rastogi

2022

JIBR

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Purpose The public listing of small and medium enterprises (SMEs) is a recent phenomenon in India, started in 2012. Such a paradigm shift for SMEs has altered the ownership structure of these firms. In addition, the listing has provided a notable status to SMEs, leading to a shift in exposure to market competition. Literature signifies that these changing dynamics are likely to impact the firm value. This study aims to examine the effects of promoters’ ownership and market competition on the firm value of listed SMEs in India. Ownership concentration (promoters’ ownership) is investigated as the primary proxy for internal governance mechanism, while market competition is investigated as an external form of firm regulation. Design/methodology/approach Three years of panel data from 2018 to 2020 of 80 listed Indian SMEs are used to conduct the analysis. The fixed effects model and cluster robust standard errors captured the detected fixed effects while adjusting for heteroskedasticity and autocorrelation. Besides, moderation analysis is conducted to test if competition regulates the relation between promoters’ ownership and firm value. Findings Promoters’ ownership does not impact the firm value significantly. However, market competition is significant and negatively drives the firm’s value. So, the market competition provides external regulation and coerces the firms to behave well to conserve the firm value. Finally, competition does not regulate the relationship between ownership effects and firm value. Therefore, the study contrasts the belief that the benefits of internal governance (especially promoters’ ownership) for firms in competitive economies are subject to market competition. Originality/value The study establishes the possibility of an integrated approach where internal and external governance mechanisms coexist to drive the firm value and endorses the same. The study is relevant to shareholders, practitioners, lawmakers and academics.

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Impact of SME Listing on Capital Structure Decisions

Cited by 16 publications

References 0 publications

Financial Preferences of Listed SMEs in India: An Empirical Study

Financial Preferences of Listed SMEs in India: An Empirical Study

Financing preference of listed small and medium enterprises (SMEs): evidence from NSE Emerge Platform in India

Impact of promoters’ ownership and competition on firm’s value: a study of listed SMEs

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