Hur underprissättning påverkar efterföljande prestation
This thesis examines underpricing and the long run performance of IPO firms on the Swedish equity market during 1994-2010. We further investigate whether any correlation exist between underpricing and post-IPO performance during 36 months. We use a sample of 80 IPO firms. To examine the aftermarket performance we compare total return of each firm with a matching industry index. In order to strengthen our analysis, we run a second test, comparing actual return for each firm with expected return, adjusted for firm specific risk. Under each of these approaches, we use linear regression analysis to investigate potential correlation between initial return and aftermarket performance. Our main contribution is that we examine if the initial return for IPO-firms affect aftermarket performance, which has not previously been studied on the Swedish equity market. Our findings suggest that there is underperformance after 36 months when comparing total return to an industry index. However, this underperformance disappears when accounting for firm specific risk. Furthermore, we find no statistically significant correlation between initial return and aftermarket performance during this time period.