Auctioned IPOs: The U.S. Evidence

50 Pages Posted: 9 Oct 2009 Last revised: 9 Mar 2013

See all articles by Francois Degeorge

Francois Degeorge

University of Lugano - Faculty of Economics; Swiss Finance Institute; European Corporate Governance Institute (ECGI)

François Derrien

HEC Paris - Finance Department

Kent L. Womack

University of Toronto - Rotman School of Management (Deceased)

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Between 1999 and 2007, WR Hambrecht completed 19 IPOs in the U.S. using an auction mechanism. We analyze investor behavior and mechanism performance in these auctioned IPOs using detailed bidding data. The existence of some bids posted at high prices suggests that some investors (mostly retail) try to free-ride on the mechanism. But institutional demand in these auctions is very elastic, suggesting that institutional investors reveal information in the bidding process. Investor participation is largely predictable based on deal size, and demand is dominated by institutions. Flipping is equally prevalent in auctions as in bookbuilt deals – but unlike in bookbuilding, investors in auctions tend to flip their shares more in cold deals. Finally, we find that institutional investors, who provide more information, are rewarded by obtaining a larger share of the deals that have higher 10-day underpricing. Our results therefore suggest that auctioned IPOs could be an effective alternative to traditional bookbuilding.

Keywords: initial public offerings, investment banking, auctions

JEL Classification: G24, G32

Suggested Citation

Degeorge, Francois and Derrien, François and Womack, Kent L., Auctioned IPOs: The U.S. Evidence. Paris December 2009 Finance International Meeting AFFI - EUROFIDAI; Tuck School of Business Working Paper No. 2009-72. Available at SSRN: or

Francois Degeorge

University of Lugano - Faculty of Economics ( email )

via Giuseppe Buffi 13
CH-6904 Lugano
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41 58 666 4647 (Fax)

Swiss Finance Institute

c/o University of Geneva
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European Corporate Governance Institute (ECGI)

B-1050 Brussels

François Derrien (Contact Author)

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
33 1 39 67 72 98 (Phone)


Kent L. Womack

University of Toronto - Rotman School of Management (Deceased)

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