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Penny stocks attractiveness for retail investors

Tebaldi, Antoine
(2020)

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TEBALDI_98091500_2020.pdf
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Details

Supervisors
D'Hondt, Catherine
Faculty
Louvain School of Management
Degree label
Master [120] en sciences de gestion
Abstract
The study of the survival of an IPO, especially small size company’s IPO, is getting more and more attention in the academic world recently. The development of penny stocks in Europe is closely related to the expansion of Junior markets across Europe, a shift in the way investors see companies and on what ground they base their investments. This study focuses on the analysis of the survival and the success of 439 penny stock companies listed on the Alternative Investment Market in London between January 2005 and December 2014. To do so, the statistical software R was used to conduct a Cox Proportional Hazard regression. The results obtained suggest that the survival of the IPOs is positively related to their profitability at the time of IPO, the experience the company has in its sector and the involvement of a Venture Capitalist in the IPO process, and is negatively influenced by the size of the IPO. The study shows that the success of an IPO is influenced positively by the size of the IPO and the involvement of a prestigious nominated adviser in the IPO.