What Drives Retail Investor Investment Decisions in SME IPOs? Evidence from the Indian Market

This study investigates the factors influencing retail investors’ investment decisions in SME Initial Public Offerings (SME IPOs) in the Indian market and examines the level of investor awareness regarding this emerging investment avenue. Using data from 393 retail investors, the study assesses awareness differences across demographic groups and analyses the impact of Company Management Quality, Past Financial Performance, Sector Attractiveness, Analyst Opinion, and Corporate Governance & Transparency on investment decisions. The results reveal that investors possess a moderate to high level of awareness, with significant differences observed only across gender. Regression analysis shows that Corporate Governance & Transparency is the strongest predictor of investment decisions, followed by Company Management Quality and Past Financial Performance. Sector Attractiveness has no significant effect, while Analyst Opinion displays a negative influence. The findings highlight the importance of governance, transparency, and credible management in shaping investor confidence in SME IPOs.