Do Female Directors Signal Indian SME IPOs Quality? Evidence From a Quantile Regression Approach

The purpose of this article is to examine the influence of female directors on the underpricing of small and medium enterprise (SME) initial public offerings (IPOs) in an emerging country like India which is relatively a fruitful setting to investigate. The research in relatively underexplored area is undertaken using a sample of 403 SME IPOs issued between 2012 and 2018. Ordinary least square (OLS) regression (mean regression) and quantile regression (QR, median regression) has been used to examine the signaling role of female directors on listing day performance of Indian SME IPOs. The results unveil that presence of female directors on IPO board reduces the underpricing. However, the negative relationship lacks statistical association between the variables. Similar results have been obtained when proportion of female directors instead of female dummies is used to gauge the impact on underpricing. The study highlights the need to increase the proportion of women directors on board to break the 'glass ceiling' and capitalize their talent for improving IPO performance. The extant research investigating the impact of female directors has largely been concentrated on larger companies in developed countries. Thus, the present research contributes to the literature by examining its influence in context of IPOs of smaller firms which needs effective signals to communicate true quality to investors thereby gaining societal legitimacy.