Performance of Recent Finnish SMEs´ IPOs and Impact on Financial Results

Abstract

This study explores the scenario of recent Finnish IPOs occurred in the timeframe 2016- 2018, both in Nasdaq main market and in First North Growh Market. The research aims at analyzing the IPOs´performance based on market-adjusted price performance and the post-IPO developments in financial results. Thus, the author provides an investor-oriented perspective and a company-oriented perspective. The study was carried out as a statistical study. The author collected share price data for a sample of twelve companies to find out performance trends and patterns. Data was analysed through buy-and-hold abnormal returns (BHAR) method to ascertain the price performance related to relevant market benchmarks. Post-IPO analysis about the impact on financial results consisted on describing the trends for a set of selected financial performance indicators to find out whether and at what extent IPOs benefited companies. Stock performance analysis shows a general tendency to underperform in the short-run and to perform well in long-run, which confirms once more that companies shares are longterm securities by nature. Market severe volatility was, nevertheless, a peculiarity spotted in this study. Moreover, the study provided evidence that IPOs helped consistently companies in reducing business risk and improve operational efficiency at least in the short-run, whereas analysis on profitability and growth perspective did not show a a clear overall connection between IPOs and profitability across the whole sample, as results were mixed, although proving that in some cases companies improve profitability levels in the long-run and streghten their growth capabilities. Moreover, results leave room for further research, as to why market was so volatile and why financial performance either was not so strongly affected by public listing, or even deterioriated after the IPO.