Institutional bidding behaviors during IPO bookbuilding: Evidence from Korea

Chanyoung Eom

Journal of Corporate Finance, 2018, vol. 48, issue C, 413-427

Abstract: Using a unique Korean initial public offering bookbuilding dataset, this study examines the impacts of presales to institutions and premarket interest on institutional bidding decisions, and makes the following observations. First, there is no significant relationship between presales and bidding decisions. This can be attributed to the fact that Korean underwriters offer institutions more allocations of less underpriced shares. Second, institutions become more willing to bid aggressively as premarket interest increases. Third, institutional incentive to submit aggressive bids is positively related to underwriter pricing discretion. Fourth, bidding strategies are conditional on the different degrees of pricing discretion. Overall, this study's evidence concludes the endogeneity of institutional bidding decisions in premarket auctions.

Keywords: Initial public offering; Bookbuilding; Institutional bidding decision (search for similar items in EconPapers)
JEL-codes: G23 G24 G32 G38 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:48:y:2018:i:c:p:413-427

DOI: 10.1016/j.jcorpfin.2017.09.024

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