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Why Are European IPOs So Rarely Priced Outside the Indicative Price Range?

Abstract:

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 whi...

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Publication status:
Published
Peer review status:
Peer reviewed

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Publisher copy:
10.1016/j.jfineco.2005.05.001

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Institution:
University of Oxford
Role:
Author
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Institution:
University of Oxford
Role:
Author
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Institution:
University of Oxford
Role:
Author
Publisher:
Elsevier
Journal:
Journal of Financial Economics More from this journal
Volume:
80
Issue:
1
Pages:
185 - 209
Publication date:
2006-01-01
DOI:
ISSN:
0304-405X
Language:
English
UUID:
uuid:8d0807d5-0ad6-4ab3-a01e-720c9469ed6b
Local pid:
oai:economics.ouls.ox.ac.uk:10981
Deposit date:
2011-08-16

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