IPO underpricing and management quality : an empirical study of the Norwegian equity market
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- Student Papers 
In this thesis I empirically examine 41 initial public offerings (IPOs), carried out on the Oslo Stock Exchange (OSE) between 2004 and 2006. In addition to investigating the underpricing in general, the focus of this thesis is to study the relationship between IPO underpricing and the quality of a company’s management. I hypothesize that companies with better and more reputable managers will incur lower underpricing. I find that the anomaly of underpricing is present in the Norwegian equity market, as the distribution of the data is positively skewed. The average company in the sample is underpriced by approximately 3%. The analysis confirms the partial adjustment theory. In addition, I find that there are no significant differences in underpricing across industries, or between venture backed and nonventure backed companies. Finally, I confirm my hypothesis that there is a negative relationship between management quality and underpricing.