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A Study on Listing Day Price Performance of BSE SME IPOs and its Determinants
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SME exchange is a relatively new platform of raising equity finance in India. A lot of research has been done on IPOs, but there is a dearth of literature on SME IPOs in India. This paper aimed to fill this research gap, to some extent, by addressing the following questions : What is the listing day price performance of BSE SME IPOs ? Are BSE SME IPOs underpriced or overpriced ? What are the factors that determine the BSE SME IPO returns on the listing day ? The study focused on a sample of 176 BSE SME listed IPOs of equity shares issued by small and medium enterprises during the period from February 23, 2012 – March 31, 2017. The results showed that on an average, SME IPOs provided positive returns of 8.66% on the listing day. Age, subscription, issue price, listing delay, market sentiment, and financial & construction sector dummies had a significant impact on listing day price performance of SME IPOs. An important implication of the study is that it supports SEBI’s initiatives to reduce the issue listing time.
Keywords
Small and Medium Enterprises, Initial Public Offering, Underpricing, Listing Day Returns, Lead Manager Reputation.
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