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Preference for bid time in hybrid auctioned IPOs: Evidence from China

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  • He, Jingbin
  • Ma, Xinru
  • Liao, Jingchi

Abstract

Using comprehensive bidding data of 783 Chinese IPOs from June 2009 to November 2012, we investigate institutions’ preference for bid time in hybrid auctions. We find that (1) earlier bids are associated with higher pricing errors, which is more pronounced in IPOs with greater uncertainty; (2) the bid prices of earlier bids tend to be aggressively high; (3) earlier bids are associated with fewer bid shares and allocations; (4) bidders submitting earlier bids (hereafter, earlier bidders) have inferior profits; and (5) earlier bidders show persistence in bid time. Overall, the empirical results remain robust after controlling for unobserved bidder-underwriter relationships and indicate that earlier bidders tend to be less informed. Our findings reveal and highlight the effect of bid time on identifying informative bids in hybrid auctions.

Suggested Citation

  • He, Jingbin & Ma, Xinru & Liao, Jingchi, 2021. "Preference for bid time in hybrid auctioned IPOs: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:ecofin:v:57:y:2021:i:c:s1062940821000267
    DOI: 10.1016/j.najef.2021.101389
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    More about this item

    Keywords

    IPO; Hybrid auction; Bid time; Information;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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