Firm complexity and IPO underpricing

Sammanfattning: The purpose of this thesis is to investigate the relationship between information production and firm complexity during initial public offerings. By studying 528 U.S. IPOs during the time period 2000-2015 we find support for our claim that increased complexity contributes to increased underpricing which may serve to diminish the effect additional underwriting managers have on the level of underpricing present in initial public offerings. Additionally, we find that factors such as age help reduce the amount underpricing, a result which is explained by more public information being available for older firms and the ex-ante uncertainty regarding the firm value is thus reduced. Finally, we find that issuers backed by venture capital do in fact experience a higher degree of underpricing than unbacked firms do. We suggest that initial public offerings in firms exhibiting high degrees of complexity will generally experience more underpricing.