Further views on Initial Public Offerings: A study of long-run stock performance, operating performance and expectations on the Swedish market.
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
As a result of the proposal that IPO firms generally underperform in the long run, this thesis contributes to the previous researches by examining the long-run stock performance of the Swedish IPO firms during 1987 to 1995. We also analyse the development of both the operating performance and the expectations in these firms and additionally we examine the relation between the initial level of these variables and the subsequent long-run stock performance. We find that to some extent the IPO firms overperform compared to a benchmark constituting of matching firms. They overperform both in a three-year-period and in a five-year-period. However, when adjusting to various indices the results show, in both time periods, a significant underperformance. In sum, we conclude that the very existence of the long-run underperformance anomaly is partly inconsistent with our data in the Swedish market during our research period. We further document that the unadjusted level of the operating performance both statistically and economically decline and stay below the IPO level in both the three and the five-year-period and that these patterns remain even after controlling for the intra-industry effects. However, these changes seem to be overall well anticipated by the market. Though, when looking at the expectations, the developments of the expectations in the Swedish IPO firms seem to be similar to the matching firms. More precise, we find no evidence that the initial expectations of the Swedish IPO firms have been inaccurate or overstated during our research period.
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IdentifiersURN: urn:nbn:se:su:diva-2695OAI: oai:DiVA.org:su-2695DiVA: diva2:191762