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We provide a model of bookbuilding in IPOs, in which the issuer can choose to ration shares. We consider two allocation …
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-discriminatory auctions to bookbuilding. We find that bookbuilding leads to significantly higher underpricing than hybrid price …-discriminatory auctions. Further, we find evidence that price accuracy tends to be higher for auctions than for bookbuilding. The results hold … regulation. The results suggest that the interests of issuers and underwriters are not aligned. The popularity of bookbuilding …
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