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Choice of Selling Mechanism at the IPO: the Case of the French Second Market

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  • Sigrid Vandemaele

Abstract

This study examines the choice of flotation mechanism within the framework of the French Second Market. Between 1983 and 1996, a firm that opted for a quotation on the Second Market, had the choice between (i) an auction-like procedure (there were two variants) and (ii) a fixed-price introduction procedure. Several interesting results are presented. First, the choice for an auction-like procedure appears to be positively related to firm valuation uncertainty at the IPO. Second, the likelihood of opting for an auction-like procedure decreases as the reputation of the investment bank guiding the flotation increases. Third, the likelihood of opting for an auction is increasing in the number of secondary shares sold by venture capitalists and investment banks. Copyright Blackwell Publishing Ltd, 2003.

Suggested Citation

  • Sigrid Vandemaele, 2003. "Choice of Selling Mechanism at the IPO: the Case of the French Second Market," European Financial Management, European Financial Management Association, vol. 9(4), pages 435-455.
  • Handle: RePEc:bla:eufman:v:9:y:2003:i:4:p:435-455
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    Cited by:

    1. Ma, Shiguang & Faff, Robert, 2007. "Market conditions and the optimal IPO allocation mechanism in China," Pacific-Basin Finance Journal, Elsevier, vol. 15(2), pages 121-139, April.
    2. Brown, James R. & Martinsson, Gustav & Petersen, Bruce C., 2012. "Do financing constraints matter for R&D?," European Economic Review, Elsevier, vol. 56(8), pages 1512-1529.
    3. Cerezo Sánchez, David, 2017. "An Optimal ICO Mechanism," MPRA Paper 81285, University Library of Munich, Germany.
    4. Guray Kucukkocaoglu, 2007. "Underpricing in Turkey: Comparison of the IPO Methods," Money Macro and Finance (MMF) Research Group Conference 2006 8, Money Macro and Finance Research Group.
    5. Guray Kucukkocaoglu & Ozge Sezgin Alp, 2012. "IPO mechanism selection by using Classification and Regression Trees," Quality & Quantity: International Journal of Methodology, Springer, vol. 46(3), pages 873-888, April.

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