Page 14 - MSME BULLETIN 2022 .indd

MSME & START-UP BULLETIN, VOLUME 1, ISSUE 1, AUGUST 2022

Introduction Literature review
To open routes for SMEs the Govt. of India allowed (Ashish Sharma, 2018) study SME fi nancing and
NSE and BSE to open exchanges where SME’s could success of companies post IPO. (Dr. Makarand S.
enlist and their stocks could be publically traded. These Wazal, 2020) study the IPO performance in SME
are BSE SME and NSE Emerge (IIFL, 2021). This Exchanges vis a vis the main board. The author
took time but in this year 2022, SMEs have raised highlight issues of transparency and lesser subscriptions
a mammoth Rs. 900 crores (Soni, 2022). Last year compared to Main Board IPOs. (Arora & Singh,
some of them gave 100% returns (Roy, 2021). The 2020) examine the factors for oversubscription of
regulations for a SME IPO is simplifi ed compared to a SME IPOs and conclude that fi rm size, underpricing,
mainboard IPO on NSE or BSE. SME IPOs released underwriter reputation are important factors while issue
after 2021 are studied to check how the CSR activities price and listing delays are some of the downturns.
impact the investor decisions. The companies are (Arora & Singh, 2021)9 and 12 months share returns
randomly chosen for the testing. The avenues for the of Indian SME IPOs is studied using event time
SMEs is not just limited to Angel Investors and IPOs, methodologies, i.e. buy and hold returns, cumulative
other crowdfunding models are emerging. We will abnormal returns and wealth relatives on a sample of
investigate the Initial Coin Offerings and Security Token 375 SME IPOs issued during February 2012 to May
Offerings in this paper. Govt. policy like automatic FDI 2018. Additionally, ordinary least square regression
route, MSME cluster development, Credit guarantee has been used to investigate the determinants of long-
schemes, etc., have provided avenues for SMEs. The run performance of SME IPOs on a reduced sample of
start-up ecosystems are emerging and another avenue 104 because of non-availability of price observations.
for the MSMEs to raise funds where embedded fi nance Findings The fi ndings reveal that Indian SME IPOs
is evolving. However, the less evolved area is that of exhibit long-run overperformance contradicting the
the DApps (distributed applications ) and blockchain. international evidences of underperformance, and
We analyse the prospects in this sector and will this be this overperformance is signifi cantly evident using
the future of fundraising. Since 2017 many start-ups buy and hold abnormal return (BHAR show SME
have raised funds through ICOs despite the ambiguity IPOs are performing well and exhibit buy and hold
of government regulations (Bansal, 2017). WandX, abnormal returns (BHAR). In their exploratory study
Bangalore based start-up raised USD 4 Million through on sustainability and blockchain (Jayawardhana
their ICO. Other names were Drivezy, Nucleus Vision, & Colombage, 2020) discuss the two pillars of
BitIndia, Cashaa. The ICOs and STOs are the new way sustainability i.e., responsibility and governance.
of crowdsourcing for start-ups (Kozhanova, 2020). The authors cite examples of CSR activities to achieve
these objectives and show how blockchain can fi ll the
Initial Coin Offering (ICO) and Security gaps. (Elise Alfi eri, 2020) discuss how cryptocurrency
Token Offerings (STO) and sustainability are linked. They break down the
It is simply a way by which instead of equity the social pillar into three factors of miners’ incentive,
founders provide digital tokens to investors to raise community’s inclusion and user privacy. The results
funds. These digital assets may be used in future to show that inclusion and miners’ wage premiums are
take services from the company or exchanged for irrelevant to coins’ valuation and remain unaccounted
currency. The sole purpose of the ICOs were to reduce for by market participants. Furthermore, privacy is
trading costs and streamline trading process. This was penalised by the market. (Gangi et al., 2020) show
overshadowed by scams and thus ‘trust factor’ was that fi rms with good corporate governance do CSR,
taken away (Rangwala, 2019).With the threats SEC by studying 51 countries and 2480 fi rms. They also
is studying this sector for regulations. The evolution conclude that CSR impacts negatively the fi rms risk of
of new securities Security Token Offerings (STO) fi nancial distress. (Francesco Bollazzi, 2017) show that
happened thus in 2019. These security tokens are the commitment of business in terms of ESG and CSR
a better regulated form of digital tokens. The STOs impacts the performance of the SME IPOs, in particular
are backed by physical assets like stocks, metal and regarding underpricing and ROE in Italian stock
bonds. There are many advantages of STOs. They exchange. (Ghalke et al., 2018) show that SME IPOs
suit regulatory requirements, they provide fractional company give better focus to earnings management
ownership i.e., multiple owners can buy a single asset, than Main Board IPOs in India.(Hou et al., 2020)
they reduce costs by removing middlemen and they investigate the how corporate social responsibility
provide better liquidity. (CSR) activities of listed enterprises on SME Borad in
China is impacted by effects of stakeholder protection

14 The Institute of Cost Accountants of India