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Fixed-price, auction, and bookbuilding IPOs: Empirical evidence in Taiwan

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  • Huang, Hsin-Yi
  • Chiang, Min-Hsien
  • Lin, Jia-Hui
  • Lin, Yun

Abstract

This study investigates the effects of three initial public offering (IPO) methods-namely, fixed-price, auction, and bookbuilding, all of which have been brought into practice in Taiwan-on post-IPO performance and the trading behavior of institutional investors. Of these three methods, the empirical results show that bookbuilding IPOs exhibit significantly higher initial returns and institutional ownership of stock offerings, and that auction IPOs have higher long-run returns. The price effect of institutional herding and flipping behavior with respect to fixed-price IPOs significantly erode long-run IPO performance.

Suggested Citation

  • Huang, Hsin-Yi & Chiang, Min-Hsien & Lin, Jia-Hui & Lin, Yun, 2017. "Fixed-price, auction, and bookbuilding IPOs: Empirical evidence in Taiwan," Finance Research Letters, Elsevier, vol. 22(C), pages 11-19.
    • Handle: RePEc:eee:finlet:v:22:y:2017:i:c:p:11-19
    DOI: 10.1016/j.frl.2017.04.002
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    Cited by:

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    3. Oghenovo A. Obrimah, 2023. "Underpricing of initial public offerings (IPOs) and the credibility of underwriters’ pricing services," SN Business & Economics, Springer, vol. 3(2), pages 1-33, February.

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    More about this item

    Keywords

    Initial public offering (IPO); Bookbuilding; Auction; Institutional investment;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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