Evaluation of Influencing Factors of IPO Underpricing in Finnish Stock Market
Syrjäläinen, Jani (2019)
2019
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2019053013595
https://urn.fi/URN:NBN:fi:amk-2019053013595
Tiivistelmä
Initial public offerings (IPOs) have become more popular again in Finland after a very quiet period between 2002 and 2014. Listings have historically offered good short-term returns for investors, but in the long-term, IPO stocks have not performed as well as other listed companies.
The goal of this research is to examine the existence of IPO underpricing in Finland and the effect of selected factors on the level of underpricing. The factors chosen for this study are the size of the offering, IPO method, the chosen marketplace, and age and industry of the company. The data sample used in this research contains 50 companies that went public on First North Helsinki and the main list between 2012 and 2018.
At the beginning of the theory part, financial markets are introduced, and reasons to go public are examined. After this, the study deepens into describing the IPO process generally and then more specifically in Finland. Finally, the most important theories of IPO underpricing are introduced.
The effect of selected factors is examined by multiple regression analysis with six independent variables. A market-adjusted first-day return is used as a dependent variable. The results of the regression analysis are introduced, and the validity of the model is tested in the empirical part.
An average first-market day return of IPOs issued between 2012 and 2018 was 3.63%. According to the study, only the age of the firm can be used to explain the degree of underpricing. Other selected factors do not provide statistically significant results. The study indicates that IPO underpricing cannot be explained with individual theories or variables, but there are always multiple factors affecting the degree of underpricing.
The goal of this research is to examine the existence of IPO underpricing in Finland and the effect of selected factors on the level of underpricing. The factors chosen for this study are the size of the offering, IPO method, the chosen marketplace, and age and industry of the company. The data sample used in this research contains 50 companies that went public on First North Helsinki and the main list between 2012 and 2018.
At the beginning of the theory part, financial markets are introduced, and reasons to go public are examined. After this, the study deepens into describing the IPO process generally and then more specifically in Finland. Finally, the most important theories of IPO underpricing are introduced.
The effect of selected factors is examined by multiple regression analysis with six independent variables. A market-adjusted first-day return is used as a dependent variable. The results of the regression analysis are introduced, and the validity of the model is tested in the empirical part.
An average first-market day return of IPOs issued between 2012 and 2018 was 3.63%. According to the study, only the age of the firm can be used to explain the degree of underpricing. Other selected factors do not provide statistically significant results. The study indicates that IPO underpricing cannot be explained with individual theories or variables, but there are always multiple factors affecting the degree of underpricing.