Competitive effects of initial public offerings in Sweden
Abstract: In this paper we examine the competitive effects of initial public offerings (IPOs) in the Swedish financial markets and find that Swedish firms indeed show negative reactions to the IPOs of competing firms both in terms of stock returns and operating performance. We also attempt to explain the level of underperformance by employing two previously proven determinants of competitive IPO effects (leverage and non-financial advantages such as research intensity) but find that leverage does not explain the level of underperformance and that research intense firms experience a greater decline in operating income growth which is contrary to previous research. Thus, we prove that there are competitive effects of IPOs in Sweden but we can only partly explain the differences in these effects using models previously proven in the U.S.
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