Do IPOs create profitable opportunities for retail investors? : a quantitative study on the Nordic markets

Abstract: The purpose of this study was to investigate if retail investors have profitable opportunities in the Nordic markets. We want to contribute with up-to-date research to help retail investors make a better investment choice in the Nordic markets. Previous research have linked different theories and models to explain why underpricing might occur and amongst the most cited theories by researchers are the information asymmetry, winner’s curse and signaling hypothesis. To investigate if there are profitable opportunities for retail investors we chose to conduct a quantitative cross-sectional study on 68 IPOs from the years 2005 to 2011 in the Nordic markets. We conclude that retail investors have profitable opportunities in the Nordic markets by investing in all IPOs.