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Market performance of Nordic initial public offerings (IPOs) and its determinants

Bardoff, Kristoffer; Solvik, Erik
Master thesis
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http://hdl.handle.net/11250/2485683
Issue date
2017
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  • Master of Science [835]
Abstract
We study the short-run stock market performance of 219 Nordic initial

public offerings (IPOs) listed between 2001 and 2016 and its

determinants. Short-run stock market performance is measured by the

first-day market-adjusted return. In order to identify determinants of

short-run market performance we use multiple regression models with

firm, market and offer specific variables in accordance with selected

theories.

We find that, overall, Nordic IPOs was underpriced with 4.53% on

average. However, there are quite large differences in underpricing

between the Nordic countries. Swedish IPOs had an average first-day

return of 7.35% and Finnish 7.97%, Denmark had 5.58% while in Norway

it was 0.60%. These findings suggest a downward sloping trend in the

level of underpricing in the Nordics over the past decades. Furthermore,

our results indicate that investor sentiment is a determinant of short-run

performance of IPOs in the Nordics in general. We further find that hot

issue markets, firm age, firm assets, pricing technique, offer price relative

to file price range and the reputation of the underwriter are determinants

of short-run market performance, but that these results vary by country,

suggesting that there are different determinants of short-run performance

within the Nordic countries. The overall findings on determinants support

the investor sentiment theory, the hot market phenomenon and

information revelation theory, while it is conflicting with the main

implications of the winner`s curse theory.
Description
Masteroppgave(MSc) in Master of Science in Business, Finance - Handelshøyskolen BI, 2017
Publisher
BI Norwegian Business School

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