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| Author: | Brisley, N. Busaba, W.Y. |
| Title: | Secret reservation prices in bookbuilding |
| Journal: | Review of finance
2007 : DEC, VOL. 11:4, p. 693-718 |
| Index terms: | banking investments securities prices auctions models |
| Language: | eng |
| Abstract: | It is asked why the issuer's reservation price (henceforth as: r-prc. / r-prcs.) is not disclosed in bookbuilding. This study analyzes the differential effect of r-prc. disclosure (here as: dscl.) on the underpricing required to elicit truthful indications of interest from investors. It is found that a policy of dscl. would increase proceeds for firms with a r-prc. sufficiently high relative to possible investor valuations of the shares, but would decrease proceeds for issuers with lower r-prcs. etc. |
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