IPO Pricing Mechanisms

Initial public offerings (IPO) pricing mechanisms can be classified into three basic methods, i.e., fixed price, auctions, and book-building, based on 1) whether the underwriter has or not acquired information about value of the IPOs from investors before the issue, and 2) whether the underwriter controls over or not allocation of the shares. From 1980s, the U.S. book-building method has become increasingly popular for IPOs worldwide, whereas IPO auctions and fixed price have been abandoned in nearly all of the countries (or regions) where they have been tried.In this dissertation, I provide some explanation for above-mentioned trends by 1) modeling book-building, uniform price auctions and public offer (a.k.a. fixed price, universal offer or open offer) in an environment where the number of investors and the accuracy of investors' information are endogenous, and 2) providing some evidence from China's IPO A shares markets. I hope the evidence from China's markets can support the book-building reform in China from 2005. More details about the disstetaion are as follows:Firstly, I develop a model based on Biais and Faugeron-Crouzet (2002). The model shows that book-building method is a relatively optimal mechanism just because the underpricing in book-building is lower than the ones in uniform prices...