How does the market condition affect the IPO market? : -Evidence from the Nordic region

The Nordic markets have in recent years been flooded by IPOs, which have attracted the attention of investors seeking to capitalise on the IPO market. Previous studies on the IPO market have found strong evidence of underpricing, which is increasing in good market conditons. Using a sample of 448 IPOs, this thesis have examinated how the IPOs in the Nordic region perfrom in the aftermarket during one year, dependent on the market conditon at the time of the issuance. The IPOs in the sample have been divided into subgroups based on the market condtion at the time of the issuance, and a totalt of three different defitnions of how the market conditoion is defined have been used. The abnormal return of the IPOs have furthermore been calculated against two alternative benchmarks to streanghen the validity of the result. The result of the study indicates that the underpricing of IPOs in the Nordic region is lower compared to other larger economies. Evidence have also been presented which show that the market condition at the time of the issuance greatly affects the return of the IPOs.