Aftermarket Performances of Book Building and Fixed Price Offerings on the Istanbul stock Exchange

Erkin Uzun

Istanbul Stock Exchange Review, 2009, vol. 11, issue 43, 53-80

Abstract: The objective of this study is to compare fixed price and book building IPOs in terms of aftermarket performances. On a sample of 28 IPOs (15 book build and 13 fixed price) from 2004 to 2007, it is found that book built IPOs outperform fixed price IPOs, on the contrary to most of the studies indicating that fixed price offerings are more under priced due to the greater uncertainty. This study lists 4 possible reasons for this discrepancy: i) issuing firms’ and underwriters’ fear of under subscription, ii) decrease in the quality of IPOing firms with fixed price offering, iii) increased press coverage and increased and more favorable research coverage in book building offerings, iv) the possibility of informed investors’ misrepresenting their information in order to get more profit by trading in the aftermarket.

Keywords: Initial Public Offering; IPO; underpricing; abnormal return; fixed price offer; book building; aftermarket performance of IPOs (search for similar items in EconPapers)
JEL-codes: G11 G12 G24 (search for similar items in EconPapers)
Date: 2009
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