Barbarians at the bell? A study on private equity-sponsored companies' post-IPO operating performance in relation to analysts' estimates in the Nordics

Abstract: This study examines the association between private equity (PE) sponsorship and analysts' forecast errors in the context of initial public offerings (IPOs) in the Nordics. The sample of 90 observations is collected using offering data from firms listed on the main lists in Sweden, Finland, Denmark and Norway covering the time period 2011-2016. We perform multivariate robust regression analyses investigating the association between PE backing and analysts' forecast errors on earnings per share in the context of IPOs. The results show a positive correlation between forecast error and PE sponsorship, significant at a 5 percent significance level. Performing robustness checks, we find that the association is insignificant when excluding Swedish observations from the sample. For Swedish observations only, we find a positive association significant at a 1 percent significance level. We conclude that while the results are ambiguous in the Nordic setting, they indicate a Swedish pattern which potentially could be applicable in a larger setting.