Performance of IPOs on the Nordic Market: Factors affecting Nordic IPOs before and after the financial crisis

Sammanfattning: ABSTRACT Title: Performance of IPOs on the Nordic Market Factors affecting Nordic IPOs before and after the financial crisis Course: NEKN02, Economics: Master Essay 1 – Finance Program Authors: Serajelden Aburawi, Leo Dajakaj Advisors: Martin Striebomy, Anders Vilhelmsson Key words: IPO, First-day return, Long-run performance, BHAR, Private Equity, Venture Capitalist Purpose: This study aims to determine if there are any differences in the long-run performance and first-day returns between IPOs on the Nordic market with different ownership structures before and after the financial crisis of 2008. Furthermore, variables from previous studies have been chosen in order to study if they have an impact on the long-run performance of IPOs on the Nordic market Methodology: The collected secondary data was analyzed through a quantitative method with a deductive approach Theoretical perspectives: The previous studies that have been used in this paper have mainly concentrated on the long-run performance and first-day returns of IPOs on the European and US markets. Empirical foundation: The basis for this study was data from firms on Nordic stock exchanges. The data was attained from Argentum, DataStream, Zephyr, annual-reports and firm-prospectuses Conclusions: This paper find that there is significant difference in leverage ratio, market capitalization and offering size between private-equity backed IPOs, venture capital-backed IPOs and non-sponsored issues before and after the financial crisis. Further, private equity-backed IPOs in the sample outperform both venture capital-backed IPOs and non-sponsored issues in the long-run and have the lowest first-day returns before and after the financial crisis, however the differences are insignificant. Further, the independent variable offering size showed a significant negative impact on BHAR before and after the financial crisis and the independent dummy variable private equity showed a significant positive impact on BHAR after the financial crisis.