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IPO Pricing with Bookbuilding and a When-Issued Market

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Author Info
Alex Stomper (Department of Business Studies, University of Vienna)
Wolfgang Aussenegg (Department of Finance, Vienna University of Technology)
Pegaret Pichler (Department of Finance and Economics, Sloan School of Management Massachusetts Institute of Technology)
Abstract

This paper examines the German IPO pricing process which combines bookbuilding with a liquid pre-IPO when-issued market. We find no partial adjustment phenomenon, as has been documented for U.S. IPOs. We thus find no evidence that bookbuilding provides information for IPO pricing, beyond the information that is required to set preliminary price ranges. Once price ranges are set, when-issued trading commences and indicates how IPOs should be priced in the primary market. However, the evidence suggests that such trading does not fully supplant information gathering through bookbuilding.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.8.

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Date of creation: Jan 2004
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Handle: RePEc:fem:femwpa:2004.8

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Related research
Keywords: Initial public offerings; Bookbuilding; When-issued trading;

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Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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