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Revisiting Bookbuilding Versus Auction Ipos: A Perspective Of Informationally Efficient Prices In The Aftermarket

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  • Hyeongsop Shim
  • Junyoup Lee
  • Ha‐Chin Yi

Abstract

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.

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  • Hyeongsop Shim & Junyoup Lee & Ha‐Chin Yi, 2019. "Revisiting Bookbuilding Versus Auction Ipos: A Perspective Of Informationally Efficient Prices In The Aftermarket," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 42(3), pages 491-523, September.
    • Handle: RePEc:bla:jfnres:v:42:y:2019:i:3:p:491-523
    DOI: 10.1111/jfir.12181
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    Cited by:

    1. Fred E. Huibers, 2020. "Towards an Optimal IPO Mechanism," JRFM, MDPI, vol. 13(6), pages 1-14, June.

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