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IPO Pricing with Bookbuilding and a When-Issued Market

Author

Listed:
  • Alex Stomper

    (Department of Business Studies, University of Vienna)

  • Wolfgang Aussenegg

    (Department of Finance, Vienna University of Technology)

  • Pegaret Pichler

    (Department of Finance and Economics, Sloan School of Management Massachusetts Institute of Technology)

Abstract

This paper examines the German IPO pricing process which combines bookbuilding with a liquid pre-IPO when-issued market. We find no partial adjustment phenomenon, as has been documented for U.S. IPOs. We thus find no evidence that bookbuilding provides information for IPO pricing, beyond the information that is required to set preliminary price ranges. Once price ranges are set, when-issued trading commences and indicates how IPOs should be priced in the primary market. However, the evidence suggests that such trading does not fully supplant information gathering through bookbuilding.

Suggested Citation

  • Alex Stomper & Wolfgang Aussenegg & Pegaret Pichler, 2004. "IPO Pricing with Bookbuilding and a When-Issued Market," Working Papers 2004.8, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2004.8
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Initial public offerings; Bookbuilding; When-issued trading;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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