The Relation between the Real Interest Rate and Initial Public Offerings
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
IPO volume varies considerably over time. This study seeks to estimate if, and how, the real interest rate explains these variations. We estimate the effect of the real interest rate on IPO volume by analyzing 15 European countries over two decades. We find that the relation between the real interest rate and IPO volume is inversely U-shaped. A very low real interest rate creates incentives to delay IPOs. As the real interest rate increases, it initially expedites IPOs, but upon reaching a very high level, it discourages IPOs as future income is discounted more heavily.
Place, publisher, year, edition, pages
IPO, real interest rate, investor sentiment, capital demand
IdentifiersURN: urn:nbn:se:uu:diva-243200OAI: oai:DiVA.org:uu-243200DiVA: diva2:786363
Bask, Mikael, Universitetslektor
Guvå, Tomas, Universitetsadjunkt