In a weak IPO the underwriter may attempt to prevent the share price of the issuer from falling below the offer price by undertaking stabilisation activities on the aftermarket. This paper examines the price support activities of underwriters in the Nordics providing direct evidence of IPO stabilisation with a sample of 344 Finnish and Swedish IPOs spanning from 2005 to 2023. I find that aftermarket stabilisation is very common in the Nordic IPO market with more than one-third of all IPOs in the full sample being stabilised for 10.3 days on average. Moreover, I find that the underwriter manages the stabilisation process using both the overallotment option and stabilisation in combination. Naked short positions are extremely rare and small in size while pure stabilisation where the underwriter accumulates a positive inventory position is non-existent. Characteristics of stabilised IPOs also differ significantly from non-stabilised offerings. In addition to being larger and taken public by a higher number of underwriters, the stabilised IPOs have on average significantly lower first-day returns. Finally, I find that stabilisation activities are significant in explaining aftermarket returns. Whether the price support has a permanent or temporary impact seem to be dependent on how close to the real market value the offering has been priced at by the underwriter to begin with.
