Underpricing and Long-Run Performance of FinTech IPOs

Abstract

This thesis investigates the short- and long-run performance of 70 US FinTech IPOs issued between 2008 and 2018. We find that, during this period, FinTech IPOs experienced an average underpricing of 23%, which is significantly higher relative to the overall IPO market in the US in the same period (10.7%). We also find that venture capital backing has a significant positive effect on underpricing of FinTech IPOs. Moreover, high IPO activity seems to have a negative impact on the level of underpricing. In the long-run perspective, our findings indicate that FinTech IPOs experience positive abnormal returns, which is in contrast to most previous research. However, the long-run results are not statistically significant at an acceptable level and could be explained by randomness alone. Additionally, the results show that FinTech IPOs listed during a high IPO volume period have a negative effect on long-run performance. Keywords: FinTech, IPOs, underpricing, long-run abnormal returns