Investor Education and IPO Participation

摘要

This study analyzes how the educational characteristics of investors affect their participation in initial public offerings on the stock market. We use a unique dataset from the Tallinn stock exchange that combines the stock market transactions of a full business cycle from 2004 to 2012 with an official educational dataset. Having controlled for gender, age, wealth, and investor trading behavior, we find empirical evidence that investors with better high-school exam results in mathematics and high-school leavers without an academic degree are less likely to participate in an IPO. The opposite is true for investors who have higher education, a bachelor's degree or a degree in the social sciences, economics or public administration, who are all more likely to participate in an IPO. We find that the long-term returns of IPO stocks underperform benchmark index returns.