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Cover me, I'm going public! : “The relationship between IPO and media coverage”
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
2018 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Background: The number of IPOs has been numerous in recent years. Moreover, the returns of the IPOs managed to either be over and underpriced. IPO-firms are generally unknown before they get listed. Therefore, the media outlets play an essential role in the dissemination of information to new investors. Thus, it becomes noteworthy to investigate whether media attention could be an explanatory factor for the first-day returns and how it affects an IPO in the short-term perspective.

Research Questions: i) If the amount of media coverage two months pre-IPO has any relation with the first trading day return and ii) If the amount of media coverage helps to predict the IPOs stock return volatility after a two-month period (44 trading days)?

Purpose: This research will attempt to find evidence if the amount of media coverage pre- IPO may drive the demand for the IPO and the first-day return. For this purpose, it is also necessary to find the under and/or overpricing. Furthermore, a regression analysis will be applied during a two-month period after the first trading day to investigate if increasing volatility depends on the amount of media coverage.

Delimitations: The sample consists of 165 IPOs in Sweden from Aktietorget and OMX Stockholm during the period 2005-2017. IPOs are initial introductions that are not unit IPOs, mergers & acquisitions, right issues, spin-offs or buy-out firms.

Method: The first research question is explained by a Pearson correlation where X is the media variable and tested against the degree of under or overpricing. Furthermore, a multiple-linear regression is examined where variables market index, Retriever data and trading volume is tested against stock return.

Conclusion: It has been identified that Aktietorget has been overpriced 2005-2017 by 2.9% while OMXS has been underpriced 6.8%. In summary, the study did not manage statistically to ensure that the amount of media coverage significantly influenced the stock return volatility.

Place, publisher, year, edition, pages
2018. , p. 80
Keywords [en]
IPO, Hot/Cold Market, Investment bank, Underpricing, Media coverage, Roadshow, Prospectus, POP, media attention, Retriever
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hj:diva-40000ISRN: JU-IHH-FÖA-2-20180603OAI: oai:DiVA.org:hj-40000DiVA, id: diva2:1215078
Subject / course
IHH, Business Administration
Supervisors
Examiners
Available from: 2018-06-18 Created: 2018-06-07 Last updated: 2018-06-18Bibliographically approved

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