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Allocation of shares to foreign and domestic investors: Firm and ownership characteristics in 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
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
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. Vol. 34, p. 52-65
Keywords [en]
Finance, IPO, Allocation, Underpricing, Investors, Breadth of Ownership, foreign
National Category
Business Administration Social Sciences
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:uu:diva-240313DOI: 10.1016/j.ribaf.2014.12.002OAI: oai:DiVA.org:uu-240313DiVA, id: diva2:776207
Available from: 2015-01-07 Created: 2015-01-07 Last updated: 2020-06-12
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
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