Underpricing of IPOs in Nasdaq Helsinki main list and First North

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master_Hyvönen_Severi_2024.pdf (920.86 KB)

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School of Business | Master's thesis
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Date

2024

Department

Tieto- ja palvelujohtamisen laitos

Major/Subject

Mcode

Degree programme

Information and Service Management (ISM)

Language

en

Pages

74

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Abstract

This thesis studies the initial public offering (IPO) underpricing phenomenon in the Finnish public equity markets between 2012-2021. The data includes 76 IPOs from the study period. The objective of the study is to understand the Finnish IPO market and the extent of the underpricing phenomenon, while recognizing firm-specific and economic variables that show significant relationships to underpriced issues. The study also aims to differentiate between the two public exchanges in Finland, the OMX Helsinki main list and the OMX First North. The theoretical framework of the study focuses on understanding the major the-ories discovered in previous literature, while recognizing variables to use in the em-pirical section of the study. The empirical section contains a comprehensive de-scriptive analysis followed by a statistical analysis with a multiple linear regression model. The average equally weighted IPO underpricing in the Finnish market from 2012 through 2021 is 9.21%. The statistically significant variables recognized in the study are price-over-sales -ratio, logarithmic revenue growth over the past two fiscal years, and the change of the listing exchange during the listing period. Additionally, the effect of Euribor 12-month interest rate is strong enough to warrant further re-search. The study concludes that a model that fully explains IPO underpricing is yet to be developed, and it cannot be fully attributed to the firm itself.

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Thesis advisor

Seppälä, Tomi

Keywords

IPO underpricing, public markets, information asymmetry theory, multiple regression model

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https://urn.fi/URN:NBN:fi:aalto-202408255589

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[gradu] Kauppakorkeakoulu / BIZ