IPO Failure Determinants: Evidence from the European Market

Nataliya Manko & Inna Tsymbalyuk

Student thesis: Master thesis

Abstract

The purpose of this study is to identify IPO failure determinants using a unique sample of companies from 28 European countries that went public over the time period 2007-2015.
The contribution of this study is multivarious. First of all, it is based on the analysis of a large data sample, which includes European firms that went public during cold and hot markets. Furthermore, the sample gives an opportunity to study the significance of the different market conditions, industry and time effects, as well as to isolate the impact of the main predictors on probability of failure by controlling for the above-mentioned fixed effects.
A number of accounting, market, and issue-specific variables were tested in this research. The results demonstrated that it is beneficial to use financial as well as market-specific variables for the overall predictive power of the model. It has also been documented in this study that firm-, issue- and market-specific variables alike have influence on the probability of IPO failure. The tests conducted in the present research find IPO’s age, liquidity, profitability, leverage, underwriter’s ranking, and the offer price to be significant determinants of an IPO failure.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages102