| Summary: | Title: Money left on the table - A study about underpricing in Venture Capital-backed initial public offerings in the Nordics Seminar date: 2021-01-15 Course: FEKH89, Corporate Finance Degree Project, Undergraduate level, 15 ECTS Authors: Viktor Källström, Erik Magnusson, Sofia Vögeli Advisor: Maria Gårdängen Key words: Venture Capital, Underpricing, Initial Public Offering, VC-backing Purpose: The purpose of this essay is to examine how VC-backing affects underpricing of initial public offerings. Methodology: Quantitative research Theoretical perspective: Previous research provides conflicting results in regard to whether VC-backing is increasing or decreasing underpricing of an initial public offering. Previous research is spread on different geographical markets, where none is conducted in the Nordics. Thus, this study explores this phenomenon in Sweden, Norway, Denmark and Finland. Empirical approach: The sample consists of 114 initial public offerings during the period of 2010 to 2019, where the control group is composed of 57 companies. All companies went public on the following stock markets: Nasdaq Stockholm, Nasdaq Copenhagen, Nasdaq Helsinki, Oslo Børs, Nasdaq First North Stockholm, Spotlight, Nasdaq First North Denmark, Nasdaq First North Finland. The data is collected from Bloomberg and is cross examined using Zephyr. Conclusion: The study shows that VC-backed initial public offerings are less underpriced than non VC-backed. This indicates that VC certifies that the offer price reflects all relevant information, which reduces information asymmetry. Hence, the cost of going public decreases.
|
|---|