Long-Term Performance of Initial Public Offerings in Norway : An empirical analysis of listings in Norway from 2000 until 2023 and their initial and long-term performance

Abstract

When analyzing the short- and long-term performance of Norwegian IPOs between 2000 and 2023, we find that IPOs have been underpriced with an average first-day excess return of 9.31%. The analysis also showed that the largest IPOs in the form of offer size had a lower first-day return. Furthermore, the IPOs have had poor long-term returns, and they have underperformed compared to the OSEAX. This indicates that a buy and hold strategy in Norwegian IPOs has performed poorly since 2000. On the other hand, when weighing the portfolio of IPOs based on assets, we find little signs of long-term underperformance. This means that the largest IPOs in the form of total assets performed better than smaller listings in the long run. Our results also indicate that there are hot market effects in the Norwegian market, where issues in hot markets experience better short-term returns, but worse long-term returns compared to other listings. The long-term findings are based on an analysis where the starting price is the first-day closing price. Our analysis also shows that issues in months with few hours of daylight during the autumn and winter tend to experience higher benchmark-adjusted long-term returns compared to listings in the other months. This effect has previously received little attention in both a Norwegian and international context, and hence our analysis is hopefully able to shed light on this phenomenon and make the markets more transparent. Lastly, we found that the amount of uncertainty related to an IPO has a weak, but negative effect on long-term excess returns.