Published Online:July 2025
Product Name:The IUP Journal of Applied Finance
Product Type:Article
Product Code:IJAF030725
DOI:10.71329/IUPJAF/2025.31.3.35-70
Author Name:Nischay Arora
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:35-70
The present study measures and compares the aftermarket returns of IPOs listed across both SME and mainstream platform utilizing a sample of 376 SME IPOs and 111 main IPOs issued during 2012 to 2023. Employing independent sample t-test and its alternative nonparametric Mann-Whitney U test, the findings reveal that SME IPOs radiate higher post-issue performance than main IPOs due to increasing investor base of SME IPOs from retail investors to high-net-worth individuals. Additionally, results obtained from both parametric and nonparametric tests divulge that firms listed on SME platform can be distinguished from mainstream IPO firms based on issue price, underwriter reputation, profits prior to listing, number of uses of proceeds, leverage, oversubscription, issue size, firm size, firm age, listing delay, market-adjusted excess return (MAER), volatility, promoter ownership, top 10 shareholding, board size, gender diversity, board reputation, board age, related board members and board committees. The findings provide clues to investors for making investment decisions by disseminating the information about various archetypical characteristics of companies listed on both the platforms. Policymakers can compare the risk-related characteristics and regulations of Indian SME platform with other junior exchanges and with main board of India before incorporating any regulation. However, these findings can be more constructive for regulators and policymakers if the study is extended to investigate the determinants that bring about disparities in the aftermarket performance of IPOs listed across both the platforms.
The wide expanse of scholarly research on initial public offerings (IPOs) is replete with the two major anomalies of stock market, i.e., underpricing and underperformance of IPOs.