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Aalto University School of Business Master's Theses are now in the Aaltodoc publication archive (Aalto University institutional repository)
School of Business | Department of Accounting | Accounting | 2013
Thesis number: 13451
The association of IPO underpricing with fundamental risk - Empirical evidence from an international sample of high-tech IPOs during 1990-2011
Author: Valsta, Jussi
Title: The association of IPO underpricing with fundamental risk - Empirical evidence from an international sample of high-tech IPOs during 1990-2011
Year: 2013  Language: eng
Department: Department of Accounting
Academic subject: Accounting
Index terms: laskentatoimi; accounting; hinnoittelu; pricing; riski; risk; listautuminen; listed companies; toimialat; business branches; teknologia; technology
Pages: 85
Key terms: Fundamental risk; IPO underpricing; High-tech company
Abstract:
This study examines the association of high-tech company IPO underpricing with fundamental risk. The objective of the study is to analyze academic literature on high-tech company valuation, IPO underpricing and why these specific valuation environments are considered as uncertain. Moreover, the study discusses about the fundamental value of company and most importantly, fundamental risk and its implications on high-tech company valuation and IPO underpricing. The primary objective of the study is by using statistical analyses to study whether IPO underpricing is associated with fundamental risk in high-tech context.

The study is quantitative in nature and the research question is being analyzed both with OLS regression and logistic regression models. The sample of the study covers high-tech company IPOs during 1990-2011 specified by SIC and NAICS industry codes. The analysis studies whether IPO underpricing is associated with fundamental risk and moreover, whether fundamental risk is associated differently with different levels of underpricing.

The results indicate that IPO underpricing is not primarily the cause of fundamental risk. However, analyzing the independent variables more in-depth interesting relations are found that support the findings of prior literature on the association of fundamental risk and IPO underpricing. Moreover, the results from logistic regression give more insight about the relation between different levels of underpricing and fundamental risk.
Master's theses are stored at Learning Centre in Otaniemi.