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

Paweł Śliwiński
Paweł Śliwiński
, 
Szymon Ablewski
Szymon Ablewski
, 
Kamil Gemra
Kamil Gemra
 and 
Michał Łukowski
Michał Łukowski
   | Dec 31, 2022
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Article Category: Empirical Paper
Published Online: Dec 31, 2022
Page range: 335 - 350
Received: Dec 08, 2021
Accepted: Nov 04, 2022
DOI: https://doi.org/10.2478/ijme-2022-0024
Keywords
© 2022 Paweł Śliwiński et al., published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Figure 1

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

Figure 2

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.
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.

Figure 3

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.
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
Debuting companies 16 19 15 15 14
WSE Main Market Listed companies 487 482 465 449 436
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
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