Information Production, Firm Complexity, and the Underpricing of Initial Public Offerings in Sweden

Sammanfattning: This paper studies whether the level of IPO underpricing is enforced by increased firm complexity. Evidence from a sample of 215 Swedish IPOs between 2010–2020 suggests that investor’s ex-ante uncertainty increases as issuing firms become increasingly complex. As a consequence, firms exhibiting complexity generally experience higher degrees of IPO underpricing. Moreover, we find support for our claim that hiring multiple underwriters reduces underpricing, although with a diminishing effect as companies become more complex. Inconsistent with our expectations, we find that venture capital-backed offerings experience more underpricing compared to their non-backed counterparts.