IPO Auctions: English, Dutch,...French and Internet

Posted: 19 Jan 2002

See all articles by Bruno Biais

Bruno Biais

Centre for Economic Policy Research (CEPR)

Anne Marie Faugeron-Crouzet

University Aix-Marseille III

Abstract

Unseasoned shares are sold through the Book Building process in the US and the UK, fixed price offerings in several countries, uniform price auctions in Israel or the new internet-based Open IPO mechanism, and an auction-like mechanism called the Mise en Vente in France. We analyze and compare the performance of these various IPO mechanisms within the context of a unified theoretical model. Fixed price offerings lead to inefficient pricing and winner's curse. Dutch auctions can also lead to inefficiencies, to the extent that they are conducive to tacit collusion by investors. The Book Building and Mise en Vente can lead to optimal information elicitation and price discovery. We document empirically the similarity between the Book Building and the Mise en Vente. We discuss the implications of our analysis for the design of optimal Internet IPO auctions.

Suggested Citation

Biais, Bruno and Faugeron-Crouzet, Anne Marie, IPO Auctions: English, Dutch,...French and Internet. Available at SSRN: https://ssrn.com/abstract=290804

Bruno Biais (Contact Author)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Anne Marie Faugeron-Crouzet

University Aix-Marseille III ( email )

Marseille Cedex 07
France

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