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IPO Underpricing and tech valuation: An empirical study of the Swedish IPO market
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.), Economics.
2017 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The closing price first day of trading has historically been found to exceed the offer price set in IPOs, implying that many issuing firms tend to leave money on the table in their IPO. This thesis examines the level of IPO underpricing in Sweden using unique data of IPO transactions on the largest Swedish stock exchanges during 2010-2016. It further discusses the valuation difficulties using the most common valuation methods for firms exhibiting characteristics commonly shared by technological firms.

Univariate and multivariate tests confirm the existence of underpricing on Swedish stock exchanges during the period of study. Firms in the technological sector are found to experience both high average levels of underpricing and great variance in initial returns, suggesting potential difficulties valuing technological firms. Robust univariate tests do however not yield a significant result of greater variance in initial returns compared to rest of the sample. By using regression analysis, I find capital raised relative to market capitalization to have significant negative effect on initial returns.

Place, publisher, year, edition, pages
2017. , 67 p.
Keyword [en]
IPO Underpricing, Corporate Finance, Technology firms, Valuation
National Category
Economics
Identifiers
URN: urn:nbn:se:kth:diva-209453OAI: oai:DiVA.org:kth-209453DiVA: diva2:1112402
Subject / course
Economics of Innovation and Growth
Educational program
Degree of Master - Economics of Innovation and Growth
Supervisors
Examiners
Available from: 2017-07-11 Created: 2017-06-20 Last updated: 2017-07-11Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf