IPO Underpricing on small- and microcap companies : A study of first-day returns on Spotlight Stock Market
Abstract: Historical evidence suggests that initial public offerings (IPOs), on average, are priced below their intrinsic value. In this paper, we investigate the magnitude of IPO underpricing on small- and microcap companies listed on the stock exchange Spotlight Stock Market, over the period 2012–2019. We derive from established theories on IPO underpricing, previously documented influencing factors and general assumptions for potential links to IPO underpricing. With a sample of 130 IPOs, Spotlight Stock Market was found to be underpriced by 8.31% (market-adjusted). Furthermore, a significant positive correlation was detected between IPO underpricing and the influencing driver Industry (Technology). The regression analysis did however not entail significance of the coefficients for any of the remaining variables.
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