Journal of Economics and Finance

, Volume 36, Issue 3, pp 521–554

Dutch-auction IPOs: institutional development and underpricing performance

Article

DOI: 10.1007/s12197-010-9166-3

Cite this article as:
Robinson, M.A. & Robinson, R. J Econ Finan (2012) 36: 521. doi:10.1007/s12197-010-9166-3
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Abstract

The Dutch-auction method of bringing IPOs to market has been used sparingly since its initiation in 1999 despite the potential for this method to lead to more fully-priced issues. The development of Dutch-auctioned IPOs is documented here, and institutional details are reviewed. An empirical investigation of the characteristics of these IPOs is presented. The evidence indicates smaller magnitudes of underpricing of Dutch-auctioned IPOs relative to traditional IPOs. A multi-variate analysis indicates, however, that this smaller degree of underpricing is due to factors other than the Dutch-auction process. The evidence strongly reinforces the institutional rationing hypothesis for underpricing. It also contributes to the international evidence of the failure of auctioned IPOs to avoid underpricing.

Keywords

IPODutch Auction

JEL Classification

G12G24

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Mardi Gras GamingHallandale BeachUSA
  2. 2.School of BusinessSUNY at FredoniaFredoniaUSA