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Information Production, Firm Complexity, and the Underpricing of Initial Public Offerings in Sweden

Allaf, Dyar LU and Jörnhammar, Tim LU (2021) BUSN79 20211
Department 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.
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author
Allaf, Dyar LU and Jörnhammar, Tim LU
supervisor
organization
course
BUSN79 20211
year
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}},
}