THE IMPACTS OF JAPANESE PRICE-COMPETITIVE IPO AUCTIONS VERSUS THE U.S. UNDERWRITER-PRICED IPOs

Abstract

Many researchers suggest that investment bankers underprice IPOs. However, from 1989 to 1996, all Japanese IPOs were auctioned, reducing the role of underwriters. Initial returns of Japanese price-competitive IPOs are not found lower than underwriter-priced U.S. IPOs. Issue size, firm size, general market movements, insider sales levels, and underwriter quality are not highly related to initial returns under price-competitive auctions. However, there appears to be a strong partial adjustment phenomenon. Thus, price-competitive auctions did not result in significantly lower initial returns, but did reduce the impacts of many traditional variables found to significantly affect initial returns in U.S. underwriter-priced IPOs.

Citation

Pettway, R.H. (2003), "THE IMPACTS OF JAPANESE PRICE-COMPETITIVE IPO AUCTIONS VERSUS THE U.S. UNDERWRITER-PRICED IPOs", Choi, J.J. and Hiraki, T. (Ed.) The Japanese Finance: Corporate Finance and Capital Markets in ... (International Finance Review, Vol. 4), Emerald Group Publishing Limited, Leeds, pp. 35-56. https://doi.org/10.1016/S1569-3767(03)04003-2