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Underwriter Reputation, Retail Demand, and Performance of Newly Public Small and Medium Enterprises

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  • M A Aneesha
  • A Athira
  • P J Jijo Lukose

Abstract

This paper examines how underwriter reputation influences the retail demand for SME IPOs in India. Additionally, we unearth the impact of underwriter reputation and retail demand on the initial and aftermarket performance of SME IPOs. Using sample data of 610 SME IPOs from 2012 to 2021, we found that retail investors rely on external signals, particularly those from underwriters, to make investment decisions. Moreover, IPOs backed by reputed underwriters exhibit superior performance in the long run. In addition, we observe a positive association between retail demand and initial return. However, this relationship does not translate into long-term performance, emphasizing the challenge retail investors face in accurately assessing the long-term prospects of IPOs. JEL Codes: G11, G24, G32

Suggested Citation

  • M A Aneesha & A Athira & P J Jijo Lukose, 2025. "Underwriter Reputation, Retail Demand, and Performance of Newly Public Small and Medium Enterprises," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 24(1), pages 109-133, March.
    • Handle: RePEc:sae:emffin:v:24:y:2025:i:1:p:109-133
    DOI: 10.1177/09726527241276194
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    More about this item

    Keywords

    Initial public offerings; small and medium enterprises; retail demand; underwriter reputation;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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