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Institutional bidding behaviors during IPO bookbuilding: Evidence from Korea

Title
Institutional bidding behaviors during IPO bookbuilding: Evidence from Korea
Author
엄찬영
Keywords
Initial public offering; Bookbuilding; Institutional bidding decision
Issue Date
2018-02
Publisher
ELSEVIER SCIENCE BV
Citation
JOURNAL OF CORPORATE FINANCE, v. 48, page. 413-427
Abstract
Using a unique Korean initial public offering bookbuilding dataset, this study examines the impacts of presales to institutions and premarket interest on institutional bidding decisions, and makes the following observations. First, there is no significant relationship between presales and bidding decisions. This can be attributed to the fact that Korean underwriters offer institutions more allocations of less underpriced shares. Second, institutions become more willing to bid aggressively as premarket interest increases. Third, institutional incentive to submit aggressive bids is positively related to underwriter pricing discretion. Fourth, bidding strategies are conditional on the different degrees of pricing discretion. Overall, this study's evidence concludes the endogeneity of institutional bidding decisions in premarket auctions.
URI
https://www.sciencedirect.com/science/article/pii/S0929119917301463?via%3Dihubhttps://repository.hanyang.ac.kr/handle/20.500.11754/117656
ISSN
0929-1199; 1872-6313
DOI
10.1016/j.jcorpfin.2017.09.024
Appears in Collections:
GRADUATE SCHOOL OF BUSINESS[S](경영전문대학원) > ETC
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