Employee Profile

Øyvind Norli

Head of Department - Department of Finance

Image of Øyvind Norli

Biography

Personal home page
Øyvind Norli received his Phd. from the Norwegian School of Economics and Business Administration in 1999. During the period 1999 through 2004, Norli held the David Y. Timbrell Junior Professorship (assistant professor) at Rotman School of Management, University of Toronto. Between 2003 and 2005 Norli was a visiting assistant professor at the Tuck School of Business, Dartmouth College. Øyvind Norli has been at BI Norwegian Business School since 2005. His main research interests are empirical corporate finance and empirical asset pricing. Some of his papers are listed below.

Selected papers
Liquidity and Shareholder Activism, The Review of Financial Studies, vol. 28, Issue 2, February, 2015. With Charlotte Ostergaard and Ibolya Schindele. Geographic Dispersion and Stock Returns, Journal of Financial Economics, vol. 106, Issue 3, December, 547--565, 2012. With Diego Garcia. Sports sentiment and stock returns, Journal of Finance vol. 62, No. 4, 1967--1998, 2007, with Alex Edmans and Diego Garcia. Seasoned public offerings: Resolution of the `new issues puzzle', Journal of Financial Economics vol. 56, No. 2, 251--291, 2000, with B. Espen Eckbo and Ronald W. Masulis.

Publications

Norli, Øyvind; Ostergaard, Charlotte & Schindele, Ibolya (2015)

Liquidity and Shareholder Activism

28(2) , s. 486- 520. Doi: https://doi.org/10.1093/rfs/hhu070

Blockholders' incentives to intervene in corporate governance are weakened by free-rider problems and high costs of activism. Theory suggests activists may recoup expenses through informed trading of target rms' stock when stocks are liquid. We show that stock liquidity increases the probability of activism but does less so for potentially overvalued rms for which privately informed blockholders may have greater incentives to sell their stake than to intervene. We also document that activists accumulate more stocks in targets when stock is more liquid. We conclude that liquidity helps overcome the free-rider problem and induces activism via preactivism accumulation of target rms' shares. (JEL G14, G34)

Garcia, Diego & Norli, Øyvind (2012)

Crawling EDGAR

10(1) , s. 1- 10. Doi: https://doi.org/10.1016/j.srfe.2012.04.001

While our kids may think this paper is about spiders, it is, unfortunately, about rms in the United States reporting relevant business information to the Securities and Exchange Commission (SEC). The paper is meant to serve as a primer for economists in the computing details of searching for information in the Internet. One important goal of the paper is to show how simple open-source computer scripts can be generated to access nancial data on rms that interact with regulators in the United States.

Garcia, Diego & Norli, Øyvind (2012)

Geographic dispersion and stock returns

106(3) , s. 547- 565. Doi: https://doi.org/10.1016/j.jfineco.2012.06.007

This paper shows that stocks of truly local firms have returns that exceed the return on stocks of geographically dispersed firms by 70 basis points per month. By extracting state name counts from annual reports filed with the Securities and Exchange Commission (SEC) on Form 10-K, we distinguish firms with business operations in only a few states from firms with operations in multiple states. Our findings are consistent with the view that lower investor recognition for local firms results in higher stock returns to compensate investors for insufficient diversification.

Norli, Øyvind (2008)

Individuelle investorer på Oslo Børs

11(3) , s. 47- 54.

Edmans, Alex; Garcia, Diego & Norli, Øyvind (2007)

Sports Sentiment and Stock Returns

62(4) , s. 1967- 1998.

Eckbo, B. Espen; Masulis, Ronald W. & Norli, Øyvind (2007)

Security Offerings

This essay surveys the extant literature and adds to the empirical evidence on issuance activity,flotation costs, and valuation effects of security offerings. We focus primarily on public offerings of equity for cash, although we also review and present new evidence on debt offerings and private placements. The essay has four major parts: (1) We review aggregate issue activity in exchange listed securities from 1980 through 2004. Following the IPO, only about one-half of the publicly traded firms undertake a public security offering of any type, and only about one-quarter undertake a SEO. Thus, SEOs are relatively rare, which is consistent with adverse selection costs being an important consideration when raising cash externally. (2) We review the evidence on direct issue costs across security types and flotation methods, including the more recent SEO underpricing phenomenon. A large number of studies provide evidence on the determinants of underwriter compensation, and confirm the importance of variables capturing information asymmetries and underwriter competition. (3) We survey and interpret the valuation effects of security issue announcements. In the period since the Eckbo and Masulis (1995) survey, many studies examining announcement-period stock returns have focused on the effects of flotation method choice and foreign offerings. The well-known negative average announcement effect observed for U.S. SEOs appears to be a somewhat U.S.-specific phenomenon. (4) We review and extend evidence on the performance of issuing firms in the five year post-issue period. The literature proposes either a risk based-explanation or a behavioral explanation for the phenomenon of low average realized returns following IPOs and SEOs. Standard factor model regressions fail to reject the null that the low average returns are commensurate with issuers' risk exposures. Recent theoretical developments suggest that lower risk levels following equity issues may be linked to issuers' investment activity, a promising direction for future research.

Norli, Øyvind (2006)

Fotball og aksjemarkeder

9(3) , s. 70- 75.

Eckbo, B. Espen & Norli, Øyvind (2005)

Liquidity risk, leverage and long-run IPO returns

11(1-2) , s. 1- 35.

Eckbo, B. Espen; Masulis, Ronald W. & Norli, Øyvind (2000)

Seasoned public offerings: Resolution of the "new issues puzzle"

56(2) , s. 251- 291.

Bøhren, Øyvind & Norli, Øyvind (1997)

Determinants of intercorporate shareholdings

1, s. 265- 287.

Østergaard, Charlotte & Norli, Øyvind (2020)

Innlegg: Equinors problem er både velkjent og spesielt

[Kronikk]

Bøhren, Øyvind; Michalsen, Dag & Norli, Øyvind (2017)

Finans: Teori og praksis

[Textbook].

Ostergaard, Charlotte; Norli, Øyvind & Schindele, Ibolya (2014)

Liquidity and Shareholder Activism

[Professional Article].

Norli, Øyvind (2011)

Praktisk Bruk av Kapitalverdimodellen

[Professional Article]. 27(2) , s. 15- 21.

Norli, Øyvind & Fjesme, Sturla Lyngnes (2011)

Initial Public Offering or Initial Private Placement?

[Report Research].

This paper studies the choice between an auction and a negotiation when selling a large fraction of a company. Using detailed data on ownership structure in 123 public offerings and 88 negotiated private placements, we show that negotiated private placements are much more common when there are significant private benefits of control. This finding supports the idea that a negotiated transaction allow the seller to extract more of the gains from trade when the gains from trade include private benefits.

Norli, Øyvind; Fjesme, Sturla Lyngnes & Michaely, Roni (2010)

Using Brokerage Commissions to Secure IPO Allocations

[Report Research].

Using data, at the investor level, on the allocations of shares in initial public offerings (IPOs), we document a strong positive relationship between the amount of stock-trading commission and the number of shares an investor receives in a subsequent IPO. We find no evidence to support the idea that investment banks allocate shares to investors that are perceived to be long-term investors. Our findings are consistent with the view that investment banks are able to capture some of the profits earned by investors when participating in underpriced IPOs.

Norli, Øyvind; Østergaard, Charlotte & Schindele, Ibolya (2009)

Liquidity and Shareholder Activism

[Report Research].

This paper documents that stock liquidity improves shareholders’ incentive to monitor management. Using a hand-collected sample of contested proxy solicitations and shareholder proposals as occurrences of shareholder activism, we find that poor firm performance increases the probability of shareholder activism and that this relationship is much stronger for firms with liquid stock than for other firms. The conclusion that liquidity improves monitoring is robust to different measures of firm performance and liquidity. We also document that target shareholders earn positive abnormal returns on the announcement date of activism and conclude that shareholder activism creates shareholder value.

Norli, Øyvind; Ostergaard, Charlotte & Schindele, Ibolya (2009)

Liquidity and Shareholder Activism

[Conference Lecture]. Event

Norli, Øyvind (2008)

Performance Persistance of Individual Investors

[Conference Lecture]. Event

Norli, Øyvind (2007)

Børsintroduksjoner

[Professional Article]. 23(3) , s. 11- 19.

Halpern, Paul & Norli, Øyvind (2006)

Canadian Business Trusts: A New Organizational Structure

[Professional Article]. 18(3) , s. 66- 75.

Eckbo, B. Espen & Norli, Øyvind (2004)

Liquidity Risk, Leverage and Long-run IPO Returns

[Report Research].

We examine the risk-return characteristics of a rolling portfolio investment strategy where more than six thousand Nasdaq initial public offering (IPO) stocks are bought and held for up to five years. The average long-run portfolio return is low, but IPO stocks appear as longshots, as five-year buy-and-hold returns of 1,000 percent or more are somewhat more frequent than for non-issuing Nasdaq firms matched on size and book-to-market ratio. The typical IPO firm is of average Nasdaq market capitalization but has relatively low book-to-market ratio. We also show that IPO firms exhibit relatively high stock turnover and low leverage, which may lower systematic risk exposures. To examine this possibility, we launch an easily constructed low minus high (LMH) stock turnover portfolio as a liquidity risk factor. The LMH factor produces significant betas for broad-based stock portfolios, as well as for our IPO portfolio and a comparison portfolio of seasoned equity offerings. The factor-model estimation also includes standard characteristics-based risk factors, and we explore mimicking portfolios for leveragerelated macroeconomic risks. Because they track macroeconomic aggregates, these mimicking portfolios are relatively immune to market sentiment effects. Overall, we cannot reject the hypothesis that the realized return on the IPO portfolio is commensurable with the portfolio's risk exposures, as defined here.

Eckbo, B. Espen & Norli, Øyvind (2004)

The choice of seasoned-equity selling mechanism: Theory and evidence

[Report Research].

Extending the Myers and Majluf (1984) framework, we present a model for the choice of seasoned-equity selling mechanism. A sequential pooling equilibrium exists which implies a positive market reaction to certain flotation strategies. We examine the model implications using the market reaction to issues on the Oslo Stock Exchange using the full range of flotation methods. The average market reaction is non-negative across all methods, and significantly positive for both rights offerings and private placements, as predicted. We also show that average long-run abnormal stock returns to OSE issuers are indistinguishable from zero, supporting the market rationality assumption underpinning the flotation game.

Eckbo, B. Espen & Norli, Øyvind (2004)

The choice of seasoned-equity selling mechanism: Theory and evidence

[Report Research].

Extending the Myers and Majluf (1984) framework, we present a model for the choice of seasoned-equity selling mechanism. A sequential pooling equilibrium exists which implies a positive market reaction to certain flotation strategies. We examine the model implications using the market reaction to issues on the Oslo Stock Exchange using the full range of flotation methods. The average market reaction is non-negative across all methods, and significantly positive for both rights offerings and private placements, as predicted. We also show that average long-run abnormal stock returns to OSE issuers are indistinguishable from zero, supporting the market rationality assumption underpinning the flotation game.

Eckbo, B. Espen & Norli, Øyvind (2002)

Pervasive Liquidity Risk

[Report Research].

While there is no equilibrium framework for defining liquidity risk per se, several plausible arguments suggest that liquidity risk is pervasive and thus may be priced. For example, market frictions increase the cost of hedging strategies requiring frequent portfolio rebalancing. Also, liquidity risk is likely to play a role whenever the market declines and investors are prevented from hedging via short positions. Using monthly return data from 1963–2000, and a broad set of test assets, we examine six candidate factor representations of aggregate liquidity risk, and test whether any one of these are priced. The results are interesting. First, with the surprising exception of the recent measure proposed by Pastor and Stambaugh (2001), liquidity factor shocks induce co-movements in individual stocks’ liquidity measure (commonality in liquidity). The commonality is similar to that found in the extant literature (Chordia, Roll, and Subrahmanyam (2000)), which so far has been restricted to a single year of data. Second, again with the exception of the Pastor-Stambaugh measure, the liquidity factors receive statistically significant betas when added to the Fama-French model. Third, maximum-likelihood estimates of the risk premium are significant for the measure based on bid-ask spreads, contemporaneous turnover, as well as the Pastor-Stambaugh measure, which exploits price reversals following volume shocks. Overall, the simple-to-compute, "low-minus-high" turnover factor first proposed by Eckbo and Norli (2000) appears to do as least as well as the other factor measures.

Eckbo, B. Espen & Norli, Øyvind (2002)

Risk and Long-Run IPO Returns

[Report Research].

The typical Nasdaq IPO stock underperforms the Nasdaq market index as well as non-IPO stocks matched on size and book-to-market ratio. We find that IPO firms have lower leverage ratios than the matched firms and exhibit lower exposure to leverage-related risk factors such as unexpected inflation and term spreads. Moreover, IPO firms have greater liquidity (turnover) that matched non-IPO stocks and receive lower expected returns in a factor model containing a liquidity risk factor introduced here. The factor models price IPO stocks within a rational, multifactor pricing framework. We also show that frequency of exchange delistings due to liquidations cannot explain the relatively low average IPO return realizations. The frequency of extreme positive (>=500%) return realizations is slightly greater than for non-IPO stocks. The additional "longshot" probability appears to reflect internal growth prospects as we show that IPO stocks are not acquired and delisted at a higher frequency than non-IPO Nasdaq firms.

Eckbo, B. Espen & Norli, Øyvind (2000)

Leverage, Liquidity and Long-Run IPO Returns

[Report Research].

It is well known that IPO stocks on average substantially underperform (over 3-5 years) non-IPO stocks matched on firm size. With a large sample of Nasdaq IPOs, this paper presents systematic evidence that IPO stocks are less risky than the size-matched firms and thus have lower expected return. We show that, in the years immediately following the issue, IPO stocks have lower leverage ratios and higher liquidity (turnover) than matched firms. A model with macroeconomic risk factors further reveals that IPO stocks have lower exposures than matched firms to leverage-related factors such as unexpected in ation and term-structure spreads. Moreover, when we introduce liquidity as a risk factor in a Fama-French type of model, we find that the liquidity factor also reduces expected returns to IPO stocks relative tomatched firms. Controlling for risk using either factor model, we cannot reject the hypothesis of zero abnormal returns to IPO stocks.

Eckbo, B. Espen & Norli, Øyvind (2000)

Leverage, Liquidity and Long-Run IPO Returns

[Report Research].

It is well known that IPO stocks on average substantially underperform (over 3-5 years) non-IPO stocks matched on firm size. With a large sample of Nasdaq IPOs, this paper presents systematic evidence that IPO stocks are less risky than the size-matched firms and thus have lower expected return. We show that, in the years immediately following the issue, IPO stocks have lower leverage ratios and higher liquidity (turnover) than matched firms. A model with macroeconomic risk factors further reveals that IPO stocks have lower exposures than matched firms to leverage-related factors such as unexpected in action and term-structure spreads. Moreover, when we introduce liquidity as a risk factor in a Fama-French type of model, we find that the liquidity factor also reduces expected returns to IPO stocks relative tomatched firms. Controlling for risk using either factor model, we cannot reject the hypothesis of zero abnormal returns to IPO stocks.

Eckbo, B. Espen; Masulis, Ronald W. & Norli, Øyvind (1999)

Seasoned Security Offerings: Resolution of the "New Issues Puzzle"

[Conference Lecture]. Event

The `new issues puzzle' is that stocks of common stock issuers subsequently underperform non-issuers matched on size and book-to-market ratio. With 7,000+ seasoned equity and debt issues, we document that issuer underperformance reflects lower systematic risk exposure for issuing firms relative to the matches. As equity issuers lower leverage, their exposures to unexpected inflation and default risks decrease, thus decreasing their stocks' expected returns relative to matched firms. Also, equity issues signicantly increase stock liquidity (turnover) which also lowers expected returns relative to non-issuers. Our conclusions are robust to issue characteristics, to "decontamination" of factor portfolios, and to model specifications.

Eckbo, B. Espen; Masulis, Ronald W. & Norli, Øyvind (1999)

Seasoned Security Offerings: Resolution of the "New Issues Puzzle"

[Conference Lecture]. Event

The `new issues puzzle' is that stocks of common stock issuers subsequently underperform non-issuers matched on size and book-to-market ratio. With 7,000+ seasoned equity and debt issues, we document that issuer underperformance reflects lower systematic risk exposure for issuing firms relative to the matches. As equity issuers lower leverage, their exposures to unexpected inflation and default risks decrease, thus decreasing their stocks' expected returns relative to matched firms. Also, equity issues signicantly increase stock liquidity (turnover) which also lowers expected returns relative to non-issuers. Our conclusions are robust to issue characteristics, to "decontamination" of factor portfolios, and to model specifications.

Eckbo, B. Espen; Masulis, Ronald W. & Norli, Øyvind (1999)

Seasoned Security Offerings: Resolution of the "New Issues Puzzle"

[Conference Lecture]. Event

The `new issues puzzle' is that stocks of common stock issuers subsequently underperform non-issuers matched on size and book-to-market ratio. With 7,000+ seasoned equity and debt issues, we document that issuer underperformance re ects lower systematic risk exposure for issuing firms relative to the matches. As equity issuers lower leverage, their exposures to unexpected inflation and default risks decrease, thus decreasing their stocks' expected returns relative to matched firms. Also, equity issues signicantly increase stock liquidity (turnover) which also lowers expected returns relative to non-issuers. Our conclusions are robust to issue characteristics, to "decontamination" of factor portfolios, and to model specifications.

Academic Degrees
Year Academic Department Degree
1999 Norwegian School of Economics Ph.D.
Work Experience
Year Employer Job Title
2008 - Present BI Norwegian Business School Professor of Finance
2022 - 2026 BI Norwegian Business School Head of Department of Finance
2015 - 2022 BI Norwegian Business School Dean PhD Program
2005 - 2008 BI Norwegian Business School Associate Professor
2003 - 2005 Tuck School of Business, Dartmouth College Visiting Assistant Professor
1999 - 2004 Joseph L. Rotman School of Management, University of Toronto Assistant Professor