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Shareholders and Cherry-Picking IPOs: Studies on Shareholders, Initial Public Offerings and Firm Ownership Structure
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.ORCID iD: 0000-0002-6418-326X
2020 (English)Doctoral thesis, comprehensive summary (Other academic)
Description
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 [en]
business studies, corporate finance, behavioral finance, ownership structure, shareholders, IPO, first time, rookie
National Category
Business Administration
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:uu:diva-412534ISBN: 978-91-506-2833-3 (print)OAI: oai:DiVA.org:uu-412534DiVA, id: diva2:1440005
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
List of papers
1. Allocation of shares to foreign and domestic investors: Firm and ownership characteristics in Swedish IPOs
Open this publication in new window or tab >>Allocation of shares to foreign and domestic investors: Firm and ownership characteristics in Swedish IPOs
2015 (English)In: Research In International Business and Finance, ISSN 0275-5319, E-ISSN 1878-3384, Vol. 34, p. 52-65Article in journal (Refereed) Published
Abstract [en]

In this article, we analyze underpricing of initial public offerings (IPOs) and holdings following offerings in Sweden. By exploiting a unique hand-collected data set with information on the ultimate holdings by institutional and individual investors, as well as boards of directors, we find, as most prior studies, that IPOs on average are underpriced. IPOs with low (high) initial return have higher (lower) holdings by individual investors. Institutional investors are, to a greater extent than individual investors, also able to identify underpriced firms.

Place, publisher, year, edition, pages
Elsevier, 2015
Keywords
Finance, IPO, Allocation, Underpricing, Investors, Breadth of Ownership, foreign
National Category
Business Administration Social Sciences
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-240313 (URN)10.1016/j.ribaf.2014.12.002 (DOI)
Available from: 2015-01-07 Created: 2015-01-07 Last updated: 2020-06-12
2. Rookies to the Stock Market: A Portrait of New Shareholders
Open this publication in new window or tab >>Rookies to the Stock Market: A Portrait of New Shareholders
2016 (English)In: Research In International Business and Finance, ISSN 0275-5319, E-ISSN 1878-3384, Vol. 38, no 3, p. 565-576Article in journal (Refereed) Published
Abstract [en]

This study examines individuals entering the stock market, “rookies.” The study uses unique ownership data, containing investor holdings of all listed Swedish firms over the sample period from 2004 to 2010, to examine rookies’ stock portfolios. In addition, this study explores investor sophistication among rookies, based on individual characteristics and portfolio composition. Although the average shareholder is aging and leaving the stock market, this study shows there are signs of rejuvenation, with rookies entering the stock market. The results show that the majority of rookies hold under-diversified stock portfolios and choose one large firm as their first stock market investment. Rookie characteristics display gender differences, in which the average female rookie has lower income, is older, but holds a larger stock portfolio than her male counterpart.

Keywords
Individual investor, Finance, Stock market, Stock portfolio, Rookie, Behavioral finance, New, First-time
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-300475 (URN)10.1016/j.ribaf.2016.07.001 (DOI)000386012800045 ()
Available from: 2016-08-09 Created: 2016-08-09 Last updated: 2020-06-12Bibliographically approved
3. Birds of a feather flock together: A study of new shareholders and Swedish IPOs
Open this publication in new window or tab >>Birds of a feather flock together: A study of new shareholders and Swedish IPOs
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
Keywords
behavioral, finance, shareholder, individual, IPO, rookie
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-346135 (URN)10.1016/j.jbef.2018.01.002 (DOI)000436833000001 ()
Available from: 2018-03-14 Created: 2018-03-14 Last updated: 2020-06-12Bibliographically approved
4. Offer Price and Ownership Structure: A Study of Shareholders in Swedish IPOs 2006–2016
Open this publication in new window or tab >>Offer Price and Ownership Structure: A Study of Shareholders in Swedish IPOs 2006–2016
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This study uses the stock ownership records of Swedish firms and hand-collected Initial Public Offerings (IPOs) data to analyze the offer prices and underpricing of IPO shares and the relationship with the post-IPO ownership structure. The results show that for IPO stocks with low offer prices, individual investors hold a relatively large fraction of shares compared with IPO stocks with higher offer prices. Furthermore, for low-priced IPOs, there is a negative relationship between offer price and breadth of ownership, showing that stocks with a low price can attract more investors than stocks with higher offer prices. However, there is also a size effect, with breadth of ownership being higher for larger firms. Overall, this study shows that the offer price of an IPO firm may have a moderate effect on its post-IPO ownership structure.

Keywords
corporate finance, IPO, ownership structure, Sweden, shareholder, offer price
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-412532 (URN)
Available from: 2020-06-09 Created: 2020-06-09 Last updated: 2020-06-12Bibliographically approved

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Citation style
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