The Nordic IPO Puzzle

Sammanfattning: Purpose: To evaluate the Nordic IPO markets from an academic perspective taken from an investor's point view. Methodology: Quantitative research Theoretical perspective: Majority of previous research suggest that in the long run newly listed companies underperform comparable companies on the market when comparing changes in stock prices. However, there have been some studies that have found that IPOs in certain countries deliver a positive long run performance relative to comparable non-newly listed companies during the studied periods. This study looks at the Nordic market in order to see how Nordic IPOs perform in the long run relative to comparable companies on the market and what factors can be considered key drivers of the performance. Empirical foundation: 567 companies were studied in the paper. These were companies that went public on Oslo Børs, Nasdaq Stockholm, Nasdaq Copenhagen and Nasdaq Finland during the period 1997-2014. Data from the companies and indexes were collected from Datastream. Conclusions: IPOs on the Nordic market on average tend to underperform their comparable benchmark. Number of issues, defined as number of new companies listed during a certain year, was shown to have a significant negative impact on long run performance of IPOs on the Nordic Market. With more IPOs during a specific year leading to a greater long run underperformance of IPOs listed during the same year. Long run performance of Nordic IPOs is also highly dependent on which country the IPOs occur in. Lastly, New Economy IPOs performed 32% better than IPOs active in Old Economy.