The Impact of Post-IPO Private Equity Ownership on Company Performance - An Empirical Study on the Nordic Market

Sammanfattning: This thesis contributes to existing research by examining the unexplored field on how private equity (PE) ownership post-IPO impacts financial performance (abnormal return and ROA). We investigate whether superior performance can be explained by a higher degree of sponsor ownership retention in the listed firm. To test the hypotheses, a 12 quarter post-IPO panel data sample was constructed consisting of 83 companies that underwent a public offering between January 2000 and March 2018 on one of the Nordic stock exchanges. We employ a quantitative methodology using different econometric methods dealing with potential endogeneity issues between ownership and performance, including fixed effects, lag identification, and instrumental variable estimation. Results suggest that higher degrees of PE ownership retention post-IPO positively impact the abnormal return. This is likely due to the positive signal that higher PE ownership sends to outside investors about the quality of the company and the information asymmetry existing between public and private markets. ROA, on the other hand, seems to be negatively impacted by higher degrees of PE-ownership post-IPO. These findings provide valuable insights for both investors and sponsors, as research on this aspect of PE is relatively limited.