Quality vs. Greed: Drivers of Swedish IPO Pricing A Comprehensive Analysis of IPO Valuations and the Impact of Institutional Ownership

Abstract

This study investigates the effect of different pre-IPO institutional investors on the pricing of Swedish initial public offerings(IPOs). Specifically, an event study and Ordinary Least Squares regressions are used to compare initial short-term returns of Private Equity and corporate-backed IPOs to non-backed listings. The primary findings show that Swedish IPO issues are underpriced, with private equity backed listings priced higher than nonbacked IPOs, while Corporate-backed listings appear to be priced lower. The results contest the use of signaling theory, indicating that alternative theoretical frameworks, such as agency-related explanations, should be used to describe the relationship between IPO pricing and pre-IPO investors.