Auctions versus bookbuilding: The effects of IPO regulation in Japan |
| |
Authors: | Timo Lehmann Matthias Weber |
| |
Institution: | 1. ZETRA International AG, Zurich, Switzerland;2. University of St. Gallen and Swiss Finance Institute, Sankt Gallen, Switzerland |
| |
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. |
| |
Keywords: | auction bookbuilding initial public offering IPO regulation |
|