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Main vs. junior IPO Markets : an empirical study of firm-specific characteristics that affect companies’ choice of IPO market in Sweden

Baade-Mathiesen, Johan; Melnikova, Katja
Master thesis
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URI
https://hdl.handle.net/11250/2644909
Date
2019
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  • Master Thesis [3258]
Abstract
This study examines the initial listing decision of firms that are qualified to list on Nasdaq

Stockholm main market but choose to list on Nasdaq First North junior market instead. While

many of previous studies have focused on explaining firms’ motivation behind going public, very

little research has been made on explaining firms’ choice of an IPO market. This study

contributes to the existing literature by examining company characteristics of 283 firms that went

public in Sweden between January 2007 and November 2019. During this period, 145 companies

chose to list on First North junior market even though they were eligible to list on the main

market. This is interesting as the main market is considered to be superior to junior market. We

use probit analysis to investigate whether firm-specific characteristics affect the choice of listing

on the junior market rather than the main market and find that these two markets attract firms

with different characteristics. The results show that firms controlled by managerial owners, such

as founders and/or CEOs, are more likely list on the junior market. Conversely, firms controlled

by institutional investors, such as private equity firms and venture capitalists, are more likely to

join the main market. We also find that non-profitable firms are more likely to list on the junior

market. However, we cannot find evidence for that the amount of capital raised affects firms’

initial listing choice. In summary, this study suggests that firms’ initial listing choice is not only

controlled by exchange listing requirements but also depends on company characteristics.

Keywords: IPOs, Nasdaq Stockholm, First North, main market, junior market, listing

requirements.

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