SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Alphabet Inc. (Google)
GOOGL 328.48+0.9%Jan 9 3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Glenn Petersen who wrote (318)8/8/2004 3:12:22 PM
From: RockyBalboa  Read Replies (1) of 15857
 
Here is some academic criticism of the auction process and is seems the process employed by google exhibits similar weakness:


Abstract:
We analyze Taiwan's IPO auctions to shed light on the diminishing role of auctions in IPO markets. In contrast to Ljungqvist and Wilhelm's (2002) results for bookbuilding IPOs, we find that underpricing increases with institutional allocation in auctions. This implies that issuing firms in auctions with higher institutional allocations leave more money on the table. Retail investors earn zero abnormal returns, suggesting that auctions do not benefit them. Institutional investors earn positive abnormal returns, but receive much lower allocations than in countries with bookbuilding. The results suggest that under bookbuilding underwriters could compensate institutional investors with higher allocations and lower underpricing, simultaneously reducing money left on the table and increasing institutional investors' expected dollar profits. This would benefit issuing firms and institutional investors, while not harming retail investors. Our welfare analysis implies that auctions are an inferior IPO method.

Lin, Ji-Chai, Lee, Yi-Tsung and Liu, Yu-Jane, "Why Have Auctions Been Losing Market Shares to Bookbuilding in IPO Markets?" (June 1, 2003). EFMA 2003 Helinski Meetings. ssrn.com
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News