Where is the missing value? Evidence from the game industry IPOs underpricing in Poland

Śliwiński, Paweł; Ablewski, Szymon; Gemra, Kamil; Łukowski, Michał

doi:10.2478/ijme-2022-0024

Figures & Tables

Number of game companies debuting on the WSE and NewConnect in 2016–2020.Source: Own research based on WSE data. WSE, Warsaw Stock Exchange.

NC INDEX, WIG 20, and WIG Games indices in 2016–2020. Although the WIG Games sector index was launched on March 18, 2019, its values were presented starting from September 21, 2018.Source: WSE data. WSE, Warsaw Stock Exchange.

Comparison of the IPO rates of returns from the game and no-game sectors on the first day of quotation and after 1M and 1Y from their debuts. D1: day of the debut; M1: 1 month after the debut; Y1: 1 year after the debut.

Characteristics of the first offers rates of returns from the game and no-game sectors in the period 2016–2020

	All game sector	Game sector: private offers	Game sector: public offers	Game sector: NewConnect	Game sector: Main Market
Mean (%)	55.0	87.7	22.3	58.9	41.2
SD	0.795664964	0.936708	0.450111	0.871573	0.451503
t-Statistics	3.911173637	3.746282	1.981368	3.377911	2.413904
Statistical significance	^***	^***	^*	^***	^*
N	32	16	16	25	7

Basic statistics of NewConnect and WSE issuers in 2016–2020*

		2016	2017	2018	2019	2020
NewConnect	Listed companies	406	408	387	375	377
NewConnect	Debuting companies	16	19	15	15	14
WSE Main Market	Listed companies	487	482	465	449	436
WSE Main Market	Debuting companies	19	15	7	7	7

Characteristics of the first offers rate of returns from the game and all sectors

		D1	M1	Y1
Game IPOs(All: 32)	Min-Max (%)	−69.5 to 250.5	−80.2 to 379.7	−81.0 to 657.8
	Median (%)	32.7	49.8	57.1
	Mean (%)	55.0	57.5	86.8
	SD (%)	79.6	91.3	151.5
Game IPOs(NewConnect: 25)	Min-Max (%)	−69.5 to 250.5	−80.2 to 379.7	−81.0 to 657.8
	Median (%)	34.5	48.6	66.8
	Mean (%)	58.9	64.3	101.9
	SD (%)	87.2	101.0	161.6
Game IPOs(Main Market: 7)	Min-Max (%)	−6.9 to 101.9	−14.4 to 67.6	−56.4 to 179.1
	Median (%)	30.9	57.0	1.7
	Mean	41.2	32.8	26.6
	SD	45.2	37.3	90.1
No-game IPOs(All: 67)	Min-Max (%)	−44.0 to 620.0	−72.0 to 485.1	−88.5 to 1,186.7
	Median (%)	13.6	9.4	−15.1
	Mean (%)	48.5	39.3	57.2
	SD (%)	105.5	95.5	206.6
No-game IPOs(NewConnect: 44)	Min-Max (%)	−44.0 to 620.0	−72.0 to 485.1	−88.5 to 1,186.7
	Median (%)	37.4	15.8	−1.9
	Mean (%)	71.3	55.8	90.2
	SD (%)	122.3	114.4	246.2
No-game IPOs(Main Market: 23)	Min-Max (%)	−29.3 to 62.8	−32.0 to 84.9	−79.7 to 179.1
	Median (%)	3.8	5.4	−19.6
	Mean (%)	5.1	8.5	−4.0
	SD (%)	15.7	21.3	68.3

Characteristics of the first offer rate of returns from the game and no-game sectors for subsequent years in the period of 2016–2020

		2016	2017	2018	2019	2020	2016–2020
Game sector	Debuts	5	2	7	8	10	32
	Underpricing	3	1	6	7	8	25
	Overpricing	2	1	1	1	2	7
	Mean (%)	25.7	−16.3	20.9^*	73.6^*	93.0^**	55.0^***
	Median (%)	22.0	−16.3	23.3	39.1	84.9	32.7
No-game sector	Debuts	20	23	11	7	6	67
	Underpricing	16	16	9	4	6	51
	No change	0	2	1	1	0	4
	Overpricing	4	5	1	2	0	12
	Mean (%)	24.1^**	27.6^***	45.5^*	47.1	217.3	48.5^***
	Median (%)	12.7	8.7	17.4	28.0	67.8	13.6

Trading volumes for IPOs in the game and non-game sectors at D1, M1, and Y1

	All game companies	Game companies: private offers	Game companies: public offers	Game companies: NewConnect	Game companies: Main Market
D1

Mean	301,399	392,770.13	210,028.38	302,120.24	298,824.29
SD	324,138.2165	383,423.80	228,716.65	340,636.188	280,529.67
t-Statistics	5.26001422	4.097503876	3.6731629	4.43464685	2.818293
Statistical significance	^***	^***	^***	^***	^**
n	32	16	16	25	7

M1

Median	47,356.26	49,809.42	25,252.60	34,647.57	65,907.36
Mean	46,110	65,481.96	38,200.14	50,551.74	56,445.72
SD	64,024.69073	70,470.72	35,322.09479	61,516.64934	36,850.69
t-Statistics	4.074008224	3.716832367	4.325920183	4.108785612	4.052607
Statistical significance	^***	^***	^***	^***	^***
n	32	16	16	25	7

Y1

Mean	21,799	32,078.55	10,088.99	22,219.54	18,739.66
SD	24,961.54411	26,106.18	13,673.27731	24,969.7522	18,422.20
t-Statistics	4.366518793	4.430402103	2.556028617	3.97956683	2.274601
Statistical significance	^***	^***	^**	^***	^*
n	25	13	12	20	5

Regression results (2)

	GIPOS – Private offers	GIPOs – Public offers	No-GIPOS – Private offers	No-GIPOS – Public offers
NewConnect [1]\WSE [0]	-	−0.335962 (−1.548574)	-	0.652091 (4.470154)^***
Year of IPO	0.247473 (1.563250)	0.162970 (2.227296)^**	−0.043191 (−0.454099)	0.153701 (3.497488)^***
WIG [D1]	5.228206 (0.124626)	−11.72320 (−0.857939)	25.61639 (1.964242)^*	−21.73320 (−2.529616)^**
WIG [D–1]	5.216321 (0.395991)	−30.11302 (−1.575983)	−3.482968 (−0.343858)	−19.48325 (−2.715175)^**
WIG [T–1]	10.66208 (0.943780)	0.936019 (0.158950)	−1.985592 (−0.449925)	−4.191893 (−1.180513)
WIG [M–1]	−8.617495 (−1.548601)	3.686187 (2.234503)^**	−1.604716 (−0.654016)	−2.029404 (−1.005749)
WIG.GAMES [D1]	−13.23927 (−1.332557)	3.092303 (0.172944)	−22.57897 (−1.367175)	−1.712193 (−0.092173)
WIG.GAMES [D–1]	14.88058 (1.463901)	−7.880833 (−0.656460)	−3.949185 (−0.903998)	−21.54909 (−1.469102)
WIG.GAMES [W–1]	7.684992 (1.046982)	2.511047 (0.716086)	−2.865255 (−1.256690)	−0.094838 (−0.019052)
WIG.GAMES [M–1]	−3.197250 (−0.390122)	1.291315 (1.056550)	−1.339054 (−2.357194)^*	3.829869 (1.525959)
NCINDEX [D1]	2.871421 (0.263108)	45.90438 (3.135237)^***	−14.64240 (−1.052499)	0.257850 (0.031096)
NCINDEX [D–1]	−6.640788 (−1.175878)	21.46843 (2.240100)^**	17.47464 (1.490351)	−16.05207 (−1.776898)^*
NCINDEX [W–1]	−1.692563 (−0.326314)	7.159107 (1.562447)	2.872322 (0.648556)	3.690085 (1.025435)
NCINDEX M–1 [M–1]	1.003331 (0.328602)	2.316720 (3.002314)^***	3.256832 (1.314066)	−0.277059 (−0.145136)
The value of the offer	−3.22E−08 (−0.310808)	1.16E−09 (0.540782)	−2.80E−08 (−2.407204)^**	3.11E−11 (0.784123)
The capitalization of the company	−9.77E−09 (−0.891123)	2.05E−10 (0.622635)	−4.37E−09 (−2.296425)^**	9.14E−12 (1.029754)
The value of the shares introduced to the trading	−2.06E−08 (−0.919658)	2.37E−10 (0.723325)	−5.15E−09 (−1.791981)^*	9.19E−12 (1.036916)
The value of free float	−1.48E−07 (−2.022439)^*	8.69E−10 (0.770001)	−1.72E−08 (−1.967373)^*	3.19E−11 (0.921920)
n	16	16	37	28
Underpricing – mean (%)	87.73	22.30	44.53	16.73
Underpricing – SD (%)	90.70	43.58	55.43	37.89
Number of private IPOs	16	0	0	28
Number of public IPOs	0	16	37	0

Characteristics of the IPO rates of returns from the game and no-game sectors after 1M and 1Y from their debuts

	All game companies	Game companies: private offers	Game companies: public offers	Game companies: NewConnect	Game companies: Main Market
M1

Mean (%)	57.5	82.8	32.1	64.3	32.8
SD	0.9129986	1.12129	0.57303	1.009563	0.373363
t-Statistics	3.5599357	2.953819	2.24144	3.186955	2.327168
Statistical significance	^***	^***	^**	^***	^*
N	32	16	16	25	7

Y1

Mean (%)	86.8	124.9	45.6	101.9	26.6
SD	1.5153339	1.813899	1.031422	1.615579	0.901035
t-Statistics	2.8656941	2.483026	1.531832	2.821211	0.659583
Statistical significance	^***	^**		^**
n	25	13	12	20	5

Regression results (1)

	All IPOs	Game IPOs	No-game IPOs
Game [1]\no-game [0]	0.225698 (1.691601)^*	-	-
Private [1]\public [0]	0.386802 (3.183515)^***	0.654334 (2.518507)^**	0.276035 (2.230298)^**
NewConnect [1]\WSE [0]	0.381886 (2.893440)^***	0.176881 (0.513660)	0.423386 (3.470867)^***
Year of IPO	0.137598 (3.141277)^***	0.216724 (2.296288)^**	0.067208 (1.261736)
WIG [D1]	1.047926 (0.118864)	−2.592949 (−0.130189)	2.148557 (0.244202)^*
WIG [D–1]	−5.629779 (−0.966431)	0.462730 (0.043916)	−10.58843 (−1.558410)
WIG [T–1]	−1.333989 (−0.437430)	3.440564 (0.496711)	−3.639609 (−1.213683)
WIG [M–1]	−1.685412 (−1.147583)	−1.495686 (−0.555861)	−1.976673 (−1.168461)
WIG.GAMES [D1]	−8.883673 (−1.346062)	−12.16628 (−1.467447)	9.211253 (0.848898)
WIG.GAMES [D–1]	9.098525 (1.673614)	13.13837 (1.610657)	−1.203189 (−0.198984)
WIG.GAMES [W–1]	4.423977 (1.613811)	6.805883 (1.572765)	−0.256893 (−0.090821)
WIG.GAMES [M–1]	0.292906 (0.219987)	0.852879 (0.355876)	−0451682 (−0.398930)
NCINDEX [D1]	1.235625 (0.221317)	6.259028 (0.717509)	−9.900088 (−1.255147)
NCINDEX [D–1]	−5.852847 (−1.740861)^*	−6.749160 (−1.486992)	4.135325 (0.505896)
NCINDEX [W–1]	0.719481 (0.309206)	0.313350 (0.080819)	2.081392 (0.687925)
NCINDEX M–1 [M–1]	1.740658 (1.842382)^*	1.666198 (1.198618)	1.170435 (0.702659)
The value of the offer	−1.18E−11 (−0.191373)	−2.16E−09 (−0.627552)	1.42E−12 (0.028054)
The capitalization of the company	8.80E−13 (0.062622)	−2.56E−10 (−0.471025)	3.43E−12 (0.296494)
The value of the shares introduced to the trading	1.16E−12 (0.082512)	−2.23E−10 (−0.409770)	3.62E−12 (0.313099)
The value of free float	7.45E−12 (0.145098)	−5.65E−10 (−0.295387)	1.73E−11 (0.448894)
N	97	32	65
Underpricing – mean	39.89%	55.01%	32.44%
Underpricing – SD	62.02%	78.31%	50.53%
Number of private IPOs	53	16	37
Number of public IPOs	44	16	28

Where is the missing value? Evidence from the game industry IPOs underpricing in Poland

Figures & Tables

Figure 1

Figure 2

Figure 3

Characteristics of the first offers rates of returns from the game and no-game sectors in the period 2016–2020

Basic statistics of NewConnect and WSE issuers in 2016–2020*

Characteristics of the first offers rate of returns from the game and all sectors

Characteristics of the first offer rate of returns from the game and no-game sectors for subsequent years in the period of 2016–2020

Trading volumes for IPOs in the game and non-game sectors at D1, M1, and Y1

Regression results (2)

Characteristics of the IPO rates of returns from the game and no-game sectors after 1M and 1Y from their debuts

Regression results (1)

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