The long-run performance of new listings on the Nordic stock markets: IPOs, Spin-offs and Carve-outs

Sammanfattning: This paper studies the long-run performance of new listings on the Nordic stock markets from January 1996 to April 2014 by analyzing a sample of 203 non-sponsored IPOs, 100 private equity-backed IPOs, 60 spin-offs and 30 carve-outs. First, we investigate the median buy-and-hold abnormal returns associated with the different listing groups. Second, we evaluate whether there are any systematic differences in the long-run performance between the groups. In line with prior research, we find that new Nordic listings on an aggregated level underperform applicable country indices and similarly sized firms, from the closing price on the first day of trading to three years after the listing date. However, while non-sponsored and private equity-backed IPOs experience significantly negative abnormal returns, the spin-offs and carve-outs show signs of outperformance. The difference in performance is significant for spin-offs, but the evidence is mixed for carve-outs. As spin-offs are more commonly acquired than other listings in our sample, we investigate whether the spin-off outperformance is simply a consequence of takeover premiums, but find no such evidence. In particular, we find that a group of focus-increasing spin-offs and carve-outs performs significantly better than non-focus- increasing spin-offs and carve-outs and all other benchmarks used. We control for the IPO activity at the time of the listing, firm size, industry and initial book-to-market ratio, but these variables do not explain our results.