IPO’s in Scandinavia

Pernille Rønning Hülz

Student thesis: Master thesis


The purpose of the thesis is to study the performance of Scandinavian IPOs between 2000 and 2019 on their first day of trading, as well as to test if theory stemming from other time periods and studies of other markets applies to the Scandinavian market in a current perspective.
The thesis finds that the initial return on the first day of trading is 7,22% in Scandinavia. Also the thesis finds that there is a market adjusted return of 8,85% in Sweden, 6,55% in Denmark and 4,21% in Norway. Thereby the thesis concludes that Scandinavian IPOs are on average underpriced, mostly so in Sweden.
By testing 12 hypotheses, the thesis finds that the initial return and thus the underpricing is affected by IPO activity within the same year. Also there is a significant relationship between the initial return and price/book ratio, company age and pricing method regarding the offering. Conclusively these results indicate that IPOs on average use underpricing as a signal of their quality to differentiate themselves and attract investors’ attention. Also the results are able to confirm some of the theory regarding IPOs, however it rejects ones application on the Scandinavian market in the study period.
The thesis has not been able to find significant results for all theories tested resulting in a portion of the hypothesis to be rejected, such as industry specific underpricing and autocorrelation with activity and return in previous periods. However some tendencies are seen from the thesis. The lack of significant results could be due to the sample size of 145 IPOs and further testing is therefore necessary in order to definitively speak to the application of that segment of the theory in Scandinavian markets.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2020
Number of pages80