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How does a pre-IPO credit rating affect IPO underpricing before and after financial crisis? US evidence

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.advisor Lof, Matthijs
dc.contributor.author Parmasuo, Roope
dc.date.accessioned 2020-08-09T16:00:07Z
dc.date.available 2020-08-09T16:00:07Z
dc.date.issued 2020
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/45619
dc.description.abstract This Thesis studies US IPOs with a credit rating focus. Especially I am researching IPO underpricing between two groups during 1980 and 2018: companies having a credit rating before going public and companies going public without a credit rating. I am arguing that companies having a credit rating before public listing will be underpriced less than other companies because having a credit rating before IPO corrects information asymmetries between the listing firm and an investor. This study measures underpricing by the difference between IPO price and first day closing price. I expect that the “less underpricing” -effect of pre-IPO rated firms has faded away after the financial crisis of 2008 since the credit rating agencies played a major role in the crisis. I also argue that the Sharpe ratios are better for companies with a pre-IPO credit rating for a period after the IPO. I will start my empirical research by studying what are the characteristics for a company that does have a credit rating. I find that companies having pre-IPO credit rating before IPO are statistically significantly less underpriced before 2008 than other companies and companies listing post-financial crisis are not underpriced less than other companies. The level of the pre-IPO credit rating does not influence IPO underprice. Over time, the volatilities are also lower among the pre-IPO rated companies but so seem the returns to be. Thus, Sharpe ratios for companies rated before listing. OLS regressions for first 30-, 60-, 120- and 365-day periods does not result any statistically significant coefficient for pre-IPO rated dummy. en
dc.format.extent 35+1
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.title How does a pre-IPO credit rating affect IPO underpricing before and after financial crisis? US evidence en
dc.type G2 Pro gradu, diplomityö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Business en
dc.contributor.department Rahoituksen laitos fi
dc.subject.keyword IPO underpricing en
dc.subject.keyword credit rating agencies en
dc.subject.keyword financial crisis en
dc.subject.keyword pre-IPO credit rating en
dc.subject.keyword USA en
dc.identifier.urn URN:NBN:fi:aalto-202008094595
dc.type.ontasot Master's thesis en
dc.type.ontasot Maisterin opinnäyte fi
dc.programme Finance en
dc.location P1 I fi
local.aalto.electroniconly yes
local.aalto.openaccess yes

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