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REVISITING BOOKBUILDING VERSUS AUCTION IPOS: A PERSPECTIVE OF INFORMATIONALLY EFFICIENT PRICES IN THE AFTERMARKET
Author(s) -
Shim Hyeongsop,
Lee Junyoup,
Yi HaChin
Publication year - 2019
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/jfir.12181
Subject(s) - initial public offering , divergence (linguistics) , dutch auction , monetary economics , common value auction , business , economics , financial economics , microeconomics , revenue equivalence , auction theory , linguistics , philosophy
We compare price efficiency between auction and bookbuilding initial public offerings (IPOs). Our empirical results fail to support the prevailing conjecture that bookbuilding IPOs are more price efficient than auction IPOs. We find statistical insignificance between two IPO samples or weak evidence for the opposite hypothesis. We add to the evidence that auctions yield aftermarket price efficiency equal to that of bookbuilding or are statistically indifferent when measured by market microstructure and Center for Research in Security Prices (CRSP) data. We also examine whether underlying price efficiency forces reflect the relative presence of informed institutional and retail investors, aftermarket price support, and divergence of investor expectations.