Bids and Allocations in European IPO Bookbuilding

48 Pages Posted: 1 Mar 2002

See all articles by Tim Jenkinson

Tim Jenkinson

University of Oxford - Said Business School; European Corporate Governance Institute (ECGI)

Howard Jones

University of Oxford, Saïd Business School

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2002

Abstract

This paper uses evidence from a dataset of 27 European IPOs to analyse how investors bid and the factors that influence their allocations. We have the complete books for these deals - amounting to 5540 bids - and so can analyse directly how bids and allocations are related. All these deals are private sector IPOs where the bookrunner was a leading European investment bank. We make use of a unique ranking of investor quality, associated with the likelihood of flipping the IPO, as produced by a group of US and European investment banks. We find that "high quality" investors are consistently favoured in allocation and in out-turn profits. We also find that bids submitted via the bookrunner and large bids received better pro-rata allocations and higher average profits. We find that a very small proportion of all bids submitted during the bookbuilding contain price limits - especially in hot IPOs - and, in contrast to Cornelli and Goldreich (2001), we do not find that that such bids are favoured in terms of allocation.

Note: Previously titled "Bids and Allocations in IPO Bookbuilding"

Keywords: IPOs, Bookbuilding, Bids, Allocations

JEL Classification: G14, G24

Suggested Citation

Jenkinson, Tim and Jones, Howard, Bids and Allocations in European IPO Bookbuilding (November 1, 2002). AFA 2003 Washington, DC Meetings. Available at SSRN: https://ssrn.com/abstract=302206 or http://dx.doi.org/10.2139/ssrn.302206

Tim Jenkinson (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
United Kingdom
+44 1865 288916 (Phone)
+44 1865 288831 (Fax)

HOME PAGE: http://www.sbs.oxford.edu/timjenkinson

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Howard Jones

University of Oxford, Saïd Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/research/people/Pages/HowardJones.aspx

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