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Initial Underpricing and Long-Run Aftermarket Performance of Private Equity Backed and Non-Sponsored IPOs - An Empirical Study on the Nordic Main Markets

Arborelius, Petter LU and Ristiniemi, Alexander (2016) BUSN89 20161
Department of Business Administration
Abstract
This paper investigates differences in initial underpricing and long-run aftermarket performance between private equity-backed and non-sponsored IPOs on the Nordic main markets between 1998-2012. First-day returns are calculated to measure the initial underpricing, while a BHAR approach is used to investigate the long-run aftermarket performance. Using a sample of 227 IPOs (59 private-equity backed and 168 non-sponsored), the results in this paper suggest that both private equity-backed and non-sponsored IPOs are initially underpriced. In line with previous research, private equity-backed IPOs are found to be less initially underpriced than non-sponsored IPOs. Regarding the long-run aftermarket performance, the only significant result is... (More)
This paper investigates differences in initial underpricing and long-run aftermarket performance between private equity-backed and non-sponsored IPOs on the Nordic main markets between 1998-2012. First-day returns are calculated to measure the initial underpricing, while a BHAR approach is used to investigate the long-run aftermarket performance. Using a sample of 227 IPOs (59 private-equity backed and 168 non-sponsored), the results in this paper suggest that both private equity-backed and non-sponsored IPOs are initially underpriced. In line with previous research, private equity-backed IPOs are found to be less initially underpriced than non-sponsored IPOs. Regarding the long-run aftermarket performance, the only significant result is the 12-month BHAR for the non-sponsored group, which suggests an abnormal return of 10,79 %. No statistically significant results are found on a 24 or 36-month time horizon. (Less)
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author
Arborelius, Petter LU and Ristiniemi, Alexander
supervisor
organization
course
BUSN89 20161
year
type
H1 - Master's Degree (One Year)
subject
keywords
IPO, Private Equity, Initial Return, BHAR, Hot Issue Market
language
English
id
8885901
date added to LUP
2016-08-22 12:43:10
date last changed
2016-08-22 12:43:10
@misc{8885901,
  abstract     = {This paper investigates differences in initial underpricing and long-run aftermarket performance between private equity-backed and non-sponsored IPOs on the Nordic main markets between 1998-2012. First-day returns are calculated to measure the initial underpricing, while a BHAR approach is used to investigate the long-run aftermarket performance. Using a sample of 227 IPOs (59 private-equity backed and 168 non-sponsored), the results in this paper suggest that both private equity-backed and non-sponsored IPOs are initially underpriced. In line with previous research, private equity-backed IPOs are found to be less initially underpriced than non-sponsored IPOs. Regarding the long-run aftermarket performance, the only significant result is the 12-month BHAR for the non-sponsored group, which suggests an abnormal return of 10,79 %. No statistically significant results are found on a 24 or 36-month time horizon.},
  author       = {Arborelius, Petter and Ristiniemi, Alexander},
  keyword      = {IPO,Private Equity,Initial Return,BHAR,Hot Issue Market},
  language     = {eng},
  note         = {Student Paper},
  title        = {Initial Underpricing and Long-Run Aftermarket Performance of Private Equity Backed and Non-Sponsored IPOs - An Empirical Study on the Nordic Main Markets},
  year         = {2016},
}