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| Author: | Derrien, F. Womack, K. L. |
| Title: | Auctions vs. bookbuilding and the control of underpricing in hot IPO markets |
| Journal: | Review of Financial Studies
2003 : SPRING, VOL. 16:1, p. 31-61 |
| Index terms: | Initial public offerings Stock returns Auctions Market theory |
| Language: | eng |
| Abstract: | Market returns before the offer price is set affect the amount and variability of initial public offering (IPO) underpricing. The French stock market offers a unique arena for empirical research on this topic, since three substantially different issuing mechanisms (auctions, bookbuilding, and fixed price) are used there. The authors show that the auction procedure's ability to incorporate more information from recent market conditions into the IPO price is an important reason. |
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