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IPO Underpricing in NASDAQ First North Stockholm: Can Investors Beat the Market?

Bruzgyte, Emilija LU and Guliyeva, Gulnura LU (2016) NEKN02 20161
Department of Economics
Abstract
Initial Public Offerings (IPOs) represent the first sale of the firms’ shares to the public. By setting lower offer prices, companies going public create opportunities for investors to earn abnormal returns, making IPOs an attractive investment strategy. This is a well-known and widely discussed in academic literature the IPO underpricing phenomenon. There are different motives for the IPO underpricing as well as different factors causing positive initial returns. The purpose of this thesis is to study the IPO underpricing phenomenon in the First North Stockholm market – an alternative Nasdaq’s market, specially designed for small and intensively growing firms. The thesis also aims to investigate whether the degree of IPO underpricing is... (More)
Initial Public Offerings (IPOs) represent the first sale of the firms’ shares to the public. By setting lower offer prices, companies going public create opportunities for investors to earn abnormal returns, making IPOs an attractive investment strategy. This is a well-known and widely discussed in academic literature the IPO underpricing phenomenon. There are different motives for the IPO underpricing as well as different factors causing positive initial returns. The purpose of this thesis is to study the IPO underpricing phenomenon in the First North Stockholm market – an alternative Nasdaq’s market, specially designed for small and intensively growing firms. The thesis also aims to investigate whether the degree of IPO underpricing is influenced by the firm’s age, offer size, proceeds raised, leverage, Certified Adviser reputation or industry. The sample of 83 IPOs during the period of 2009-2015 is used. The multiple regression model together with univariate regressions and general IPO underpricing formulas are applied. The results show that Swedish IPOs in the First North market are on average underpriced, indicating that investors can actually beat the market and earn abnormal returns by investing in the First North market. The further analysis of IPO influencing factors reveals that most of the chosen factors are not significant for the given sample. (Less)
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author
Bruzgyte, Emilija LU and Guliyeva, Gulnura LU
supervisor
organization
course
NEKN02 20161
year
type
H1 - Master's Degree (One Year)
subject
keywords
Initial Public Offerings, IPO underpricing, Nasdaq First North Sweden, IPO influencing factors, multiple regression model
language
English
id
8877619
date added to LUP
2016-06-13 14:13:55
date last changed
2016-06-13 14:13:55
@misc{8877619,
  abstract     = {Initial Public Offerings (IPOs) represent the first sale of the firms’ shares to the public. By setting lower offer prices, companies going public create opportunities for investors to earn abnormal returns, making IPOs an attractive investment strategy. This is a well-known and widely discussed in academic literature the IPO underpricing phenomenon. There are different motives for the IPO underpricing as well as different factors causing positive initial returns. The purpose of this thesis is to study the IPO underpricing phenomenon in the First North Stockholm market – an alternative Nasdaq’s market, specially designed for small and intensively growing firms. The thesis also aims to investigate whether the degree of IPO underpricing is influenced by the firm’s age, offer size, proceeds raised, leverage, Certified Adviser reputation or industry. The sample of 83 IPOs during the period of 2009-2015 is used. The multiple regression model together with univariate regressions and general IPO underpricing formulas are applied. The results show that Swedish IPOs in the First North market are on average underpriced, indicating that investors can actually beat the market and earn abnormal returns by investing in the First North market. The further analysis of IPO influencing factors reveals that most of the chosen factors are not significant for the given sample.},
  author       = {Bruzgyte, Emilija and Guliyeva, Gulnura},
  keyword      = {Initial Public Offerings,IPO underpricing,Nasdaq First North Sweden,IPO influencing factors,multiple regression model},
  language     = {eng},
  note         = {Student Paper},
  title        = {IPO Underpricing in NASDAQ First North Stockholm: Can Investors Beat the Market?},
  year         = {2016},
}