An Analysis of Initial Public Offering Mechanisms

There is a hot debate on the advantages of different initial public offerings (IPOs) mechanisms. In her PhD thesis, the award holder examined two different mechanisms used for IPOs, namely uniform price auctions and fixed price offerings, and found that the former is superior in terms of raising capital. In the extended research the award holder plans to evaluate the performances of three other IPOs mechanisms: Mise en Vente (a modified uniform price auction used in France) OpenIPO (an internet IPO auction) Bookbuilding (the most widely used IPO method) The performances of these mechanisms will be examined in a controlled laboratory environment by a series of experiments. At the completion of the proposal, a comprehensive comparison among the main IPO mechanisms used in practice will be provided. This will contribute empirical substance to the current debate and has important implications for the design of IPO mechanisms. In addition, the three mechanisms that will be examined can all be regarded as modification cases of uniform price auctions, thus it is theoretical interesting to investigate how the modification in price and allocation rules can affect the outcomes of uniform price auctions.