Information Production, Firm Complexity, and the Underpricing of Initial Public Offerings in Sweden
(2021) BUSN79 20211Department of Business Administration
- Abstract
- This paper studies whether the level of IPO underpricing is enforced by increased firm complexity. Evidence from a sample of 215 Swedish IPOs between 2010–2020 suggests that investor’s ex-ante uncertainty increases as issuing firms become increasingly complex. As a consequence, firms exhibiting complexity generally experience higher degrees of IPO underpricing. Moreover, we find support for our claim that hiring multiple underwriters reduces underpricing, although with a diminishing effect as companies become more complex. Inconsistent with our expectations, we find that venture capital-backed offerings experience more underpricing compared to their non-backed counterparts.
- Popular Abstract
- This paper studies whether the level of IPO underpricing is enforced by increased firm complexity. Evidence from a sample of 215 Swedish IPOs between 2010–2020 suggests that investor’s ex-ante uncertainty increases as issuing firms become increasingly complex. As a consequence, firms exhibiting complexity generally experience higher degrees of IPO underpricing. Moreover, we find support for our claim that hiring multiple underwriters reduces underpricing, although with a diminishing effect as companies become more complex. Inconsistent with our expectations, we find that venture capital-backed offerings experience more underpricing compared to their non-backed counterparts.
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9061217
- author
- Allaf, Dyar LU and Jörnhammar, Tim LU
- supervisor
- organization
- course
- BUSN79 20211
- year
- 2021
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- complexity, initial public offerings, underpricing, information production
- language
- English
- additional info
- N/A
- id
- 9061217
- date added to LUP
- 2021-09-08 14:02:01
- date last changed
- 2021-09-08 14:02:01
@misc{9061217, abstract = {{This paper studies whether the level of IPO underpricing is enforced by increased firm complexity. Evidence from a sample of 215 Swedish IPOs between 2010–2020 suggests that investor’s ex-ante uncertainty increases as issuing firms become increasingly complex. As a consequence, firms exhibiting complexity generally experience higher degrees of IPO underpricing. Moreover, we find support for our claim that hiring multiple underwriters reduces underpricing, although with a diminishing effect as companies become more complex. Inconsistent with our expectations, we find that venture capital-backed offerings experience more underpricing compared to their non-backed counterparts.}}, author = {{Allaf, Dyar and Jörnhammar, Tim}}, language = {{eng}}, note = {{Student Paper}}, title = {{Information Production, Firm Complexity, and the Underpricing of Initial Public Offerings in Sweden}}, year = {{2021}}, }