Nordic IPO Pricing in Hot Issue Markets : An Empirical Analysis of the Nordic IPO Surge and its Characteristics, 2015-2022
Master thesis
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https://hdl.handle.net/11250/3129734Utgivelsesdato
2023Metadata
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- Master Thesis [4298]
Sammendrag
This thesis examines the underpricing and pricing dynamics of Initial Public Offerings
(IPOs) in the Nordic region from 2015 to 2022, focusing on the ’hot issue’ years of
2020 - 2022 during the COVID-19 pandemic. Utilizing data from the SDC platinum
database, complemented by manual sampling, the study investigates factors influencing
IPO underpricing and price revision, particularly during the heightened market activity
and volatility of 2021.
Our research encompasses a sample of 570 IPOs, using Ordinary Least Squares regression
analysis. This approach reveals an unexpected negative correlation between upward
price revisions and initial returns, challenging established hypothesis such as the Cascade
Hypothesis and the Costly Information Hypothesis. Additionally, a significant finding
is the positive relationship between initial returns and positive net income prior to the
offer. Supporting this narrative, we found lower price revision among technology firms
during ’hot issue’ markets, suggesting a shift in investor preference towards financially
stable firms.
Through this analysis, our research sheds light on the intricate dynamics influencing
IPO underpricing in the Nordics during the COVID-19 pandemic. It highlights the vital
role of underwriters and the evolving investor preferences in shaping the IPO pricing
landscape. The findings, while constrained by limitations in data availability, emphasize
the complexity of market conditions during the pandemic and underscore the need for
ongoing research to deepen our understanding of these phenomena. Overall, this thesis
not only challenges existing hypotheses in IPO pricing but also paves the way for future
explorations in this dynamic field.