Cornerstone Allocation and IPO Underpricing - Non-Linear Evidence from the Swedish Market
(2025) BUSN79 20251Department of Business Administration
- Abstract
- This study investigates the relationship between cornerstone allocation and IPO underpricing in the Swedish market, as well as the moderating role of valuation uncertainty on this relationship. Employing OLS and 2SLS frameworks on a sample of 429 Swedish IPOs from 2010 to 2024, we find evidence of a causal non-linear relationship between cornerstone allocation and IPO underpricing, taking the form of an inverted U-shape. No evidence is found for valuation uncertainty having a moderating effect on this relationship. In light of these findings, we propose a framework of optimal cornerstone allocation, where different levels act as different signaling mechanisms.
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9208290
- author
- Bodelind, Wictor LU and Sjöberg, Erik LU
- supervisor
-
- Diem Nguyen LU
- organization
- alternative title
- A quantitative study on the impact of cornerstone allocation on first-day returns and the moderating role of valuation uncertainty
- course
- BUSN79 20251
- year
- 2025
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Cornerstone Allocation, IPO, Offer price, Underpricing, Valuation Uncertainty
- language
- English
- id
- 9208290
- date added to LUP
- 2025-07-07 09:00:39
- date last changed
- 2025-07-07 09:00:39
@misc{9208290, abstract = {{This study investigates the relationship between cornerstone allocation and IPO underpricing in the Swedish market, as well as the moderating role of valuation uncertainty on this relationship. Employing OLS and 2SLS frameworks on a sample of 429 Swedish IPOs from 2010 to 2024, we find evidence of a causal non-linear relationship between cornerstone allocation and IPO underpricing, taking the form of an inverted U-shape. No evidence is found for valuation uncertainty having a moderating effect on this relationship. In light of these findings, we propose a framework of optimal cornerstone allocation, where different levels act as different signaling mechanisms.}}, author = {{Bodelind, Wictor and Sjöberg, Erik}}, language = {{eng}}, note = {{Student Paper}}, title = {{Cornerstone Allocation and IPO Underpricing - Non-Linear Evidence from the Swedish Market}}, year = {{2025}}, }