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Birds of a feather flock together: A study of new shareholders and Swedish IPOs
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.ORCID iD: 0000-0002-6418-326X
2018 (English)In: Journal of Behavioral and Experimental Finance, ISSN 2214-6350, E-ISSN 2214-6369, Vol. 18, p. 1-17Article in journal (Refereed) Published
Abstract [en]

This paper analyzes new individual investors (rookies) and the importance of initial public offerings (IPOs)in attracting rookies to the stock market, which is an issue previous research has not focused on. The paperuses stock ownership records for publicly listed Swedish firms together with data on IPOs for the period2004–2010. We find the proportion of IPO investors among rookies to be larger than for non-rookies andthat rookies are more likely to invest in IPOs than non-rookies. Thus, IPOs appear to attract rookies to alarger extent than non-rookies. Moreover, rookies investing in IPOs have a higher income and hold largerstock portfolios, but they receive lower returns compared with other rookies. In addition, the results showthat even for rookies, sophisticated investors receive higher returns than less sophisticated investors.

Place, publisher, year, edition, pages
Elsevier, 2018. Vol. 18, p. 1-17
Keywords [en]
behavioral, finance, shareholder, individual, IPO, rookie
National Category
Business Administration
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:uu:diva-346135DOI: 10.1016/j.jbef.2018.01.002ISI: 000436833000001OAI: oai:DiVA.org:uu-346135DiVA, id: diva2:1190431
Available from: 2018-03-14 Created: 2018-03-14 Last updated: 2020-06-12Bibliographically approved
In thesis
1. Shareholders and Cherry-Picking IPOs: Studies on Shareholders, Initial Public Offerings and Firm Ownership Structure
Open this publication in new window or tab >>Shareholders and Cherry-Picking IPOs: Studies on Shareholders, Initial Public Offerings and Firm Ownership Structure
2020 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation explores investor characteristics and shareholdings of publicly traded Swedish firms. The dissertation consists of an introductory chapter, three published papers, and one working paper. All four papers use Swedish data. Two of the studies examine initial public offerings (IPOs) and the ownership structure; one explores first-time shareholders, and one examines IPOs and first-time shareholders.

Paper I studies IPOs with the focus on initial return, the allocation of the shares and inside holdings. The paper presents evidence on allocation of shares to institutional and individual investors. The paper highlights the information asymmetry between institutional and individual investors and shows a wealth transfer from old to new shareholders. The results also show that money left on the table is received primarily by institutions rather than individual investors.

Paper II explores the characteristics of first-time shareholders (rookies). I portray the rookies of the stock market and present a model to explain portfolio characteristics. The results show that despite the trend of individuals leaving the stock market, there are new individuals investing in stocks. I also show that gender balance among individual shareholders is rather even, which contradicts approximations of previous studies in other countries. The paper also raises the concern of diversifying stock portfolios, as the average portfolio holds less than four shares for all individuals and less than two for rookies. 

Paper III studies the relationship between IPOs and rookies. The paper highlights whether rookies invest in IPOs. The results show that besides bringing new firms to the stock market, IPOs contribute to that market, as they attract rookies to invest in the IPOs. The results also show that the return for rookies investing in IPOs is lower compared with rookies investing in non-IPOs.

Paper IV studies the relationship between offer price and post-IPO ownership structure. The paper uses price groups and two definitions of breadth of ownership in the analyses. The results show that firms can affect their post-IPO ownership structure through the offer price.

Place, publisher, year, edition, pages
Uppsala: Department of Business Studies, 2020. p. 58
Series
Doctoral thesis / Företagsekonomiska institutionen, Uppsala universitet, ISSN 1103-8454 ; 203
Keywords
business studies, corporate finance, behavioral finance, ownership structure, shareholders, IPO, first time, rookie
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-412534 (URN)978-91-506-2833-3 (ISBN)
Public defence
2020-09-07, Lecture Hall 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, 13:15 (English)
Opponent
Supervisors
Available from: 2020-08-14 Created: 2020-06-12 Last updated: 2020-08-14

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