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Auctions versus bookbuilding: The effects of IPO regulation in Japan

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  • Timo Lehmann
  • Matthias Weber

Abstract

We analyze a regulatory change in the Japanese IPO market that created an abrupt shift from hybrid price‐discriminatory auctions to bookbuilding. We find that bookbuilding leads to higher underpricing than hybrid price‐discriminatory auctions. Furthermore, we find evidence that price accuracy tends to be higher for auctions than for bookbuilding. The results hold under a variety of OLS specifications and with regression discontinuity designs exploiting the abrupt change of the regulation.

Suggested Citation

  • Timo Lehmann & Matthias Weber, 2023. "Auctions versus bookbuilding: The effects of IPO regulation in Japan," The Financial Review, Eastern Finance Association, vol. 58(1), pages 117-141, February.
    • Handle: RePEc:bla:finrev:v:58:y:2023:i:1:p:117-141
    DOI: 10.1111/fire.12318
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    References listed on IDEAS

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