We analyse the pricing and allocation of unseasoned securities by means of mechanisms such as auctions or bookbuilding. Our analysis allows the pricing and allocation rules to be based not only on investors' bids, but also on information revealed through pre-issue trading of the securities in a...

In some countries, it is common that initial public offerings (IPOs) are preceded by forward ("when-issued'') trading of the shares; in the U.S., such trading is prohibited. We analyze the effect of when-issued trading on the pricing and allocation of IPO shares. We demonstrate that the optimal...

We explain and provide evidence of effects of leverage on pricing. Our model identifies two interacting effects: firms set higher prices (under-invest in market share) if they have more debt, but engage in dynamic risk-shifting by setting lower prices (over-invest in market share) just prior to...

We examine the interaction of two processes for gathering information required for pricing unseasoned securities: i)mechanisms for eliciting information directly from investors, and ii)information revelation through when - issued trading, i.e. forward trading in not - yet-issued securities. We...

We study IPO pricing in Germany in order to determine whether when-issued trading provides information that is useful for setting IPO offer prices, and whether such trading supplants bookbuilding as a source of information. We find that when-issued trading reveals relevant information for...

This paper examines the IPO pricing processes of two different markets, each of which employs bookbuilding methods for marketing the IPO shares. For each market we investigate two questions: Does bookbuilding serve mainly as a method for distributing shares, or also as a means for gathering...

We analyze the profitability of government-owned banks' lending to their owners, using a unique data set of relatively homogeneous government-owned banks; the banks are all owned by similarly structured local governments in a single country. Making use of a natural experiment that altered the...

We explain and provide evidence for effects of leverage on pricing. Our model identifies two effects that either counteract or reinforce each other, depending on the debt maturity structure: (i) firms set higher prices (underinvest in market share) if they have more debt, and (ii) firms engage...

This paper examines the German IPO pricing process which combines bookbuilding with a liquid pre-IPO when-issued market. We find no partial adjustment phenomenon, as has been documented for U.S. IPOs. We thus find no evidence that bookbuilding provides information for IPO pricing, beyond the...