Initial public offering methods in the Nordic market : a quantitative study of the relative aftermarket performance between fixed price and bookbuilding IPO’s in the Nordic market
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- Master Thesis 
The goal of this thesis is to study the relative aftermarket performance of fixed price initial public offerings relative to bookbuilding offerings in the Nordic market and discover whether there are any differences in aftermarket returns depending on the offer method chosen by the offering firm. The choice of thesis subject was motivated by the strong growth in fixed price offerings in the Nordic market since 2014, and we have therefore looked at IPOs between 2014 and October 2020. We find that the average market adjusted initial return of fixed price offerings over the study period is 13.49%, compared to similar returns for book building offerings of 4.88%. Thus, it appears that the degree of underpricing is affected by the choice of offer method. However, when adjusting for cornerstone investor subscription commitment, we find that the choice of offer method is not statistically significant as an independent variable when predicting returns. While cornerstone investors are present in both fixed price and bookbuilding offerings in our data sample, they are more common in fixed price offerings. Therefore, because cornerstone investment was found to be a significant independent variable when analyzing aftermarket returns, it can be claimed that IPO method is a proxy that can potentially help when predicting short term returns post IPO. Further, we find no statistically significant difference in the long-run market adjusted returns between fixed price and bookbuilding offerings. This supports the idea that any difference in relative underpricing is due to short-term IPO characteristics, while over time factors such as financial reporting and market conditions become more important. As there is little previous academic research on the subject of offer method and cornerstone investors in Nordic market IPOs, we believe this thesis paper complements other research material, and could serve as a basis for further research.