Long-Run IPO Performance for Family Firms - A study on the Swedish market

Abstract: This thesis studies the long-run performance of IPOs. In addition, it differentiates between family firms and non-family firms. The long-run performance is tested on listings on Nasdaq OMX Stockholm over a period from 1997 to 2011. The sample consists of 100 firms, whereas 39 firms are classified as family firms. To test the long-run IPO performance, buy-and-hold abnormal return over a three year period is used as a measure. The benchmark used for calculating the buy-and-hold abnormal return is the OMX Stockholm index. The results show that, on average, the firms in the sample underperform the benchmark with 8.37 percent, which means that after a firm conducts an IPO, the performance the following three years will be weak. The family firms perform insignificantly better than the non-family firms, with a buy-and-hold abnormal return of negative 7.18 percent, compared to negative 9.14 percent. The regressions show that family firms with low market values, as an approximation for long-run correction, have weak long-run performance post IPO. Family firms with low market values tend to perform worse than the family firms with higher market values.