Abstract
This thesis investigates and examines the reasons for First North Denmark’s underperformance compared to First North Sweden in terms of stock prices during the period from December 31, 2018, to December 31, 2022.
The paper focuses on how information in the companies’ prospectuses, as well as their transparency and reliability, can contribute to explaining the observed differences in performance. Furthermore, the study includes a discussion of potential measures that could enhance the efficiency of price formation on First North Denmark.
The study comprises an analysis of 241 recently listed companies in Denmark and Sweden, representing various industries, which showed significant differences in company characteristics before listing. Danish companies proved to be smaller, younger, had lower pre-money valuations, fewer employees, generated less revenue and had fewer assets on the balance sheet. Therefore, the Swedish companies were at large deemed to be more mature. Furthermore, the thesis uncovered deficient levels in crucial sections of the prospects, consequently giving rise to the presence of asymmetric information. Moreover, the study provided empirical evidence that the financial guidance of the Danish companies displayed notable excessive optimism, thereby leading to increased mistrust.
The findings of the study revealed that the market in Denmark is found to be more illiquid than its counterpart in Sweden. Additionally, the Danish market exhibits a higher degree of lock-up agreements adding to the low level of liquidity. These lock-up agreements restrict a significant proportion of the companies’ shares from being traded on the public market, which may impede the market’s efficiency and induce stock volatility.
The dissertation concludes that the inferior performance on First North Denmark can predominantly be attributed to the maturity of the companies, significant underpricing as well as disappointing short-term guidance. Finally, differences in investment culture act as a hindrance to attracting investors to the growth market in Denmark. To address these issues, the thesis advocates for the adoption of objective criterias and an enhancement of financial guidance in the prospectus.
| Educations | MSc in Finance and Accounting, (Graduate Programme) Final Thesis |
|---|---|
| Language | Danish |
| Publication date | 2023 |
| Number of pages | 271 |