What role, if any, have public equity markets for small, young firms in emerging markets? A recent study shows that firms going public, after the liberalization of the Indian IPO market in 1992, are smaller, younger and are less likely to be affiliated with a business group than other private firms.
These same firms, however, also suffered after the market collapse in 1997. Profitability and sales growth fell and bankruptcy rates went up, most likely due to a lack of continued financing. These results might not hold for other developing countries with small and illiquid stock markets, but they will certainly foster debate.
Join the Conversation