Why are European IPOs so rarely priced outside the indicative price range?
Unlike in the U.S., the initial price range for European IPOs is seldom revised, although issues are often priced at the upper bound. We develop a model that explains this seemingly inefficient pricing behavior. As in Europe, but not in the U.S., underwriters in the model obtain information from inv...
| Hauptverfasser: | , , |
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| Format: | Journal article |
| Veröffentlicht: |
2006
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| _version_ | 1826270965251702784 |
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| author | Jenkinson, T Morrison, A Wilhelm, W |
| author_facet | Jenkinson, T Morrison, A Wilhelm, W |
| author_sort | Jenkinson, T |
| collection | OXFORD |
| description | Unlike in the U.S., the initial price range for European IPOs is seldom revised, although issues are often priced at the upper bound. We develop a model that explains this seemingly inefficient pricing behavior. As in Europe, but not in the U.S., underwriters in the model obtain information from investors before establishing the indicative price range. A commitment to stay within the range is necessary to extract private information from investors. Ours is therefore the first treatment in which the bookbuilding range has a clear economic role. The model has important implications for empirical research based on European primary market data. |
| first_indexed | 2024-03-06T21:49:10Z |
| format | Journal article |
| id | oxford-uuid:4aa6ed1e-af01-4eeb-a9a6-216e1cad1daa |
| institution | University of Oxford |
| last_indexed | 2024-03-06T21:49:10Z |
| publishDate | 2006 |
| record_format | dspace |
| spelling | oxford-uuid:4aa6ed1e-af01-4eeb-a9a6-216e1cad1daa2022-03-26T15:38:47ZWhy are European IPOs so rarely priced outside the indicative price range?Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:4aa6ed1e-af01-4eeb-a9a6-216e1cad1daaSaïd Business School - Eureka2006Jenkinson, TMorrison, AWilhelm, WUnlike in the U.S., the initial price range for European IPOs is seldom revised, although issues are often priced at the upper bound. We develop a model that explains this seemingly inefficient pricing behavior. As in Europe, but not in the U.S., underwriters in the model obtain information from investors before establishing the indicative price range. A commitment to stay within the range is necessary to extract private information from investors. Ours is therefore the first treatment in which the bookbuilding range has a clear economic role. The model has important implications for empirical research based on European primary market data. |
| spellingShingle | Jenkinson, T Morrison, A Wilhelm, W Why are European IPOs so rarely priced outside the indicative price range? |
| title | Why are European IPOs so rarely priced outside the indicative price range? |
| title_full | Why are European IPOs so rarely priced outside the indicative price range? |
| title_fullStr | Why are European IPOs so rarely priced outside the indicative price range? |
| title_full_unstemmed | Why are European IPOs so rarely priced outside the indicative price range? |
| title_short | Why are European IPOs so rarely priced outside the indicative price range? |
| title_sort | why are european ipos so rarely priced outside the indicative price range |
| work_keys_str_mv | AT jenkinsont whyareeuropeanipossorarelypricedoutsidetheindicativepricerange AT morrisona whyareeuropeanipossorarelypricedoutsidetheindicativepricerange AT wilhelmw whyareeuropeanipossorarelypricedoutsidetheindicativepricerange |