Initial public offerings : IPO performance and prospectus sentiment of biotechnology offerings
Year: 2018
Type: dissertation
Abstract: This thesis investigates initial public offerings (IPOs) at the Nasdaq exchange in the United States during the time period of 2003 – November 17th, 2017. The focus of the thesis will be on the performance, both in the short- and long-run, of companies in the biotechnology industry. Textual analysis will be applied to determine the effect of prospectus sentiment on performance. \nFrom our sample of 781 observations, we find an average market-adjusted underpricing of 16.6%. The average market-adjusted underpricing is higher in the biotechnology industry relative to other offerings, but this difference is not statistically significant. For the long-run performance, the offerings in our sample perform 1.6 percentage points better relative to the market. The difference between biotechnology and non-biotechnology is not significant. \nOur analysis of the IPO prospectuses finds that the companies in the lowest quartile in terms of polarity score of the prospectus summary have less underpricing. Offerings in this quartile perform better in the long-run, while companies in the lower quartile of the risk factors section perform worse.
Authors: Eldin Feratovic, Lars Henrik Lundstrøm
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2924851978