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Article: Efficiency in IPO issuance processes? A case study of Google's IPO--the advantages of online auctions may be more theoretical than real.(initial public offerings)
- Article from:
- Business Economics
- Article date:
- October 1, 2005
- Author:
CopyrightCOPYRIGHT 2005 The National Association for Business Economists. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Is the online auction an efficient mechanism for pricing initial public offerings (IPOs)? Its intent was to minimize first day price surges in IPOs, which represented "money left on the table" for issuers. Evidence from Google's IPO suggests that the online auction process may not have minimized the first day price surge, since 82 percent of the IPOs issued in 2004 using the traditional process experienced less of an increase. Furthermore, a comparison of auction IPOs with traditional IPOs issued in the same year and in the same three-digit SIC code suggests that 44 percent of the auction IPOs have greater first day price surges than their traditional counterparts. A ...