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Offer Price and Ownership Structure: A Study of Shareholders in Swedish IPOs 2006–2016
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.ORCID iD: 0000-0002-6418-326X
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This study uses the stock ownership records of Swedish firms and hand-collected Initial Public Offerings (IPOs) data to analyze the offer prices and underpricing of IPO shares and the relationship with the post-IPO ownership structure. The results show that for IPO stocks with low offer prices, individual investors hold a relatively large fraction of shares compared with IPO stocks with higher offer prices. Furthermore, for low-priced IPOs, there is a negative relationship between offer price and breadth of ownership, showing that stocks with a low price can attract more investors than stocks with higher offer prices. However, there is also a size effect, with breadth of ownership being higher for larger firms. Overall, this study shows that the offer price of an IPO firm may have a moderate effect on its post-IPO ownership structure.

Keywords [en]
corporate finance, IPO, ownership structure, Sweden, shareholder, offer price
National Category
Business Administration
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:uu:diva-412532OAI: oai:DiVA.org:uu-412532DiVA, id: diva2:1437800
Available from: 2020-06-09 Created: 2020-06-09 Last updated: 2020-06-12Bibliographically approved
In thesis
1. Shareholders and Cherry-Picking IPOs: Studies on Shareholders, Initial Public Offerings and Firm Ownership Structure
Open this publication in new window or tab >>Shareholders and Cherry-Picking IPOs: Studies on Shareholders, Initial Public Offerings and Firm Ownership Structure
2020 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation explores investor characteristics and shareholdings of publicly traded Swedish firms. The dissertation consists of an introductory chapter, three published papers, and one working paper. All four papers use Swedish data. Two of the studies examine initial public offerings (IPOs) and the ownership structure; one explores first-time shareholders, and one examines IPOs and first-time shareholders.

Paper I studies IPOs with the focus on initial return, the allocation of the shares and inside holdings. The paper presents evidence on allocation of shares to institutional and individual investors. The paper highlights the information asymmetry between institutional and individual investors and shows a wealth transfer from old to new shareholders. The results also show that money left on the table is received primarily by institutions rather than individual investors.

Paper II explores the characteristics of first-time shareholders (rookies). I portray the rookies of the stock market and present a model to explain portfolio characteristics. The results show that despite the trend of individuals leaving the stock market, there are new individuals investing in stocks. I also show that gender balance among individual shareholders is rather even, which contradicts approximations of previous studies in other countries. The paper also raises the concern of diversifying stock portfolios, as the average portfolio holds less than four shares for all individuals and less than two for rookies. 

Paper III studies the relationship between IPOs and rookies. The paper highlights whether rookies invest in IPOs. The results show that besides bringing new firms to the stock market, IPOs contribute to that market, as they attract rookies to invest in the IPOs. The results also show that the return for rookies investing in IPOs is lower compared with rookies investing in non-IPOs.

Paper IV studies the relationship between offer price and post-IPO ownership structure. The paper uses price groups and two definitions of breadth of ownership in the analyses. The results show that firms can affect their post-IPO ownership structure through the offer price.

Place, publisher, year, edition, pages
Uppsala: Department of Business Studies, 2020. p. 58
Series
Doctoral thesis / Företagsekonomiska institutionen, Uppsala universitet, ISSN 1103-8454 ; 203
Keywords
business studies, corporate finance, behavioral finance, ownership structure, shareholders, IPO, first time, rookie
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-412534 (URN)978-91-506-2833-3 (ISBN)
Public defence
2020-09-07, Lecture Hall 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, 13:15 (English)
Opponent
Supervisors
Available from: 2020-08-14 Created: 2020-06-12 Last updated: 2020-08-14

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CiteExportLink to record
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Citation style
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