Innovations in new venture financing: Evidence from Indian SME IPOs

Bhattacharya, Arnab

doi:10.1016/j.gfj.2017.02.001

Cited by 13 publications

(20 citation statements)

References 73 publications

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“…In contrast to Beatty and Ritter (1986), Johnson and Miller (1988), Reutzel and Belsito (2015), Dhamija and Arora (2017), Sundarasen et al (2018) which reported negative relationship and Beatty and Welch (1996), Mitchell Van der Zahn, Singh, and Singh (2008), Chahine and Tohmé (2009), Liu and Ritter (2011), Thorsell and Issakson (2014),Gao et al (2015), Alvarez-Otero and Lopez-Iturriaga (2018) which reported positive relationship between underwriter reputation and underpricing, various other studies such as Shin (2010), Tian (2012), Anderson, Chi, and Wang (2015), Velamuri and Liu (2017), Bhattacharya (2017), Badru and Ahmad-Zaluki (2018) reported insignificant relation between the two. In the context of our study in Indian setting in case of SMEs, the positive relation between underwriter reputation and underpricing has been hypothesized in present study.…”

Section: Review Of Literaturementioning

confidence: 92%

Impact of Auditor and Underwriter Reputation on Underpricing of SME IPOs in India

Arora

Singh

2019

Management and Labour Studies

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Small and medium enterprises (SMEs) being relatively new, young and with little operating history tends to suffer from the problem of information asymmetry and ex ante uncertainty. This problem can be reduced through the use of various signals in the initial public offering (IPO) process. Hence, this study attempts to shed some light on the signalling role of prestigious auditors and underwriters and their interacted effects on IPO returns in an emerging market like India. Cross-sectional data comprising of final 286 SME IPOs issued during February 2012–March 2018 listed on the BSE SME platform and NSE EMERGE have been taken into consideration. Multiple regression analysis has been used to empirically test the signalling role. The results reveal that underwriter reputation helps in reducing information asymmetry and signals firm quality to investors. Underwriter reputation documents a positive relationship while auditor reputation lacks statistical significance. The negative relation of interaction effect of auditors and underwriters reveal that underwriter reputation plays a significant role in positively influencing investors’ perception and assisting them in taking investment decisions.

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Section: Review Of Literaturementioning

confidence: 92%

Impact of Auditor and Underwriter Reputation on Underpricing of SME IPOs in India

Arora

Singh

2019

Management and Labour Studies

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“…On the contrary, Chorruk and Worthington (2010) in Thailand and Dhamija and Arora (2017) in India reported the long-run overperformance of 99.74% and 123.53% in the first-year post listing of IPOs. Likewise, Bhattacharya (2017) chronicled long-run positive BHAR of 79.55% for the IPOs issued between March 2012 and August 2015.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 98%

“…To our knowledge, there is only one study, i.e. Bhattacharya (2017), which endeavored to investigate only few firm-specific determinants (firm size, firm age, return on equity (ROE) and underwriter reputation) of long-run performance of 106 SME IPOs issued between 2012 and 2015. Filling the lacuna of Bhattacharya (2017), the current study relates not only firm-specific variables but also various issue-specific variables to the long-run performance of SME IPOs spanning the larger sample period of 2012–2018.…”

Section: Introductionmentioning

confidence: 99%

“…Bhattacharya (2017), which endeavored to investigate only few firm-specific determinants (firm size, firm age, return on equity (ROE) and underwriter reputation) of long-run performance of 106 SME IPOs issued between 2012 and 2015. Filling the lacuna of Bhattacharya (2017), the current study relates not only firm-specific variables but also various issue-specific variables to the long-run performance of SME IPOs spanning the larger sample period of 2012–2018. Additionally, our study uses BSE SME IPO index (most representative SME IPO index) to compute post-issue market returns which have not been employed earlier in Indian settings.…”

Section: Introductionmentioning

confidence: 99%

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

Arora

Singh

2020

JABS

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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.

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“…This study and its results provide valuable insights for successful entrepreneurial fundraising through ICOs. While entrepreneurship has become a major source of job creation and economic wealth (Audretsch & Keilbach, 2004;Brong, 2004;Carree & Thurik, 2003;Castellano, 2013;Fairlie et al, 2015), financial constraints represent one of the main causes of startups' mortality (Bhattacharya, 2017;Parhankangas & Ehrlich, 2014;Van Osnabrugge & Robinson, 2000). In this context, ICT advancements that help entrepreneurs secure the financial resources that are needed to launch their startups and foster social and economic development, especially in emerging economies (Brynjolfsson & McAfee, 2016;McAfee & Brynjolfsson, 2017;Roztocki et al, 2019;Soja & da Cunha, 2015).…”

Section: Contribution For Developmentmentioning

confidence: 99%

Collecting money through blockchain technologies: first insights on the determinants of the return on Initial Coin Offerings

Cappa

Pinelli

2020

Information Technology for Development

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Initial Coin Offerings (ICOs), i.e. the initial offer of a crypto-token, represent an increasingly popular method to raise money. However, the determinants of ICOs' returns for investors are still overlooked. Following this cue, the empirical outcomes of our study based on crypto-tokens issued between 2017 and 2018 evidence the main determinants of ICOs' returns: first, crypto-tokens returns are positively associated to Ether's returns; second, ICO price is negatively associated to later price increases; third, crypto-tokens returns are lower when they are offered in presale; finally, the more a crypto-token price increases between the ICO and the listing-date on the secondary-market and the more its price rises in the following month. In so doing, we contribute to a better understanding of the ICO phenomenon and highlight which aspects may benefit fund raising, which are relevant for the establishment of new startups and more broadly for the economic development of a country.

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Innovations in new venture financing: Evidence from Indian SME IPOs

Cited by 13 publications

References 73 publications

Impact of Auditor and Underwriter Reputation on Underpricing of SME IPOs in India

Impact of Auditor and Underwriter Reputation on Underpricing of SME IPOs in India

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

Collecting money through blockchain technologies: first insights on the determinants of the return on Initial Coin Offerings

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