Does an anchor help you float? Nordic IPOs: Underpricing, aftermarket performance and the effect of cornerstone investors

Sammanfattning: This paper studies mainly the underpricing and aftermarket performance of 145 Nordic initial public offerings in two separate time periods, 2005-2007 and 2013-2016. This paper also examines the presence of cornerstone investors in recent IPOs. We have defined these two time periods as hot IPO activity periods due to the extraordinary frequency of new listings. We conduct underpricing and aftermarket performance tests based on the entire data sample as well as on a country and time period basis. Our findings on a Pan-Nordic basis indicate that the level of underpricing in the Nordics is in line with previous literature and that the IPOs outperform their corresponding national benchmark index on a medium-term basis. We cannot however conclude whether underpricing and aftermarket performance have changed between the two time periods. Our findings suggest that IPOs backed by cornerstone investors have a more narrow price range in the prospectus and experience a higher level of underpricing. We cannot draw any conclusions on the aftermarket performance of cornerstone-backed IPOs.