Has the introduction of bookbuilding increased the efficiency of international IPOs?

Tim Jenkinson, William Wilhelm and Alexander Ljungqvist ()

No 2000-FE-04, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: By 1999, close to 80% of non-U.S. IPOs were marketed using bookbuilding methods. We study whether the recent introduction of this technology by U.S. banks and their inclusion in non-U.S. IPO syndicates has promoted efficiency in primary equity markets. We analyze both direct and indirect costs (associated with underpricing) using a unique dataset containing information on 2,051 initial public offerings in 61 non-U.S. markets during the period 1992-1999. The direct costs of bookbuilding are typically twice as large as direct costs for fixed-price offers. However, bookbuilding leads to substantially less underpricing. This benefit is more pronounced when the target market includes U.S. investors, when U.S. listing is sought and when U.S. banks are part of the syndicate.

Keywords: Initial public offerings; bookbuilding; underwriting spreads (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2000-04-01
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Has the Introduction of Bookbuilding Increased the Efficiency of International IPOs? (2000)
Working Paper: Has the introduction of bookbuilding increased the efficiency of international IPOs? (2000)
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