Underpricing of Initial Public Offerings. CASE STUDY: OMX NASDAQ First North Helsinki

Abstract

Underpricing is a famous financial phenomenon that commonly emerges in Initial Public Offerings. This has attracted enormous attention from investing institution and individual investors as well as companies, thus generated many literature inspecting the reasons and characteristics of underpricing. The thesis aims to provide general understanding about IPO and underpricing and attempts to apply these knowledge to case study of NASDAQ OMX First North Helsinki. The purpose of the empirical study is to investigate on initial return rate factor, which affects the attraction of the First North Helsinki market.

The result showed that averaged return rates of First North Helsinki IPOs are negative figure. Further statistics also confirms little evidence of underpricing in First North Hel-sinki IPOs. However, this could be explained as the studying market participants are rela-tively small and fresh companies, which can hardly carry the underpricing’s drawbacks thus instead concentrate on raising as much capital as possible. Additionally, the result displays a promising future for technology and financial sectors of Finnish economies.