The Initial Market Choice : An empirical study of firm characteristics that influence the choice of market in Norway

Abstract

There is a broad consensus in the literature that firms primarily list on junior markets due to the more stringent listing requirements on main markets. However, 83 out of the 143 firms that listed on the Norwegian junior market from 2016 to 2021 were eligible to list on the main market. Therefore, it is pertinent to evaluate the initial market choice as a self-selection decision and evaluate other potential influences beyond listing requirements. Our thesis examines the influence of firm characteristics on the choice between the main market and the junior market in Norway. We employ probit and multinomial logistic analyses on 214 main and junior market listings, and find that the two attract firms with different characteristics. The results indicate that firms who opt to list on the junior market are smaller, more overvalued and float a lower percentage of shares than those who list on the main market. Contrary to existing literature on other European markets, we do not find firm age, ownership structure and profitability to influence the initial market choice, which indicates a regional discrepancy for the Norwegian stock market.