We are grateful to Schnigge AG for for their generous provision of data and to Nikolay Hovhannisyan for his valuable research assistance.
Sticky Prices: IPO Pricing on Nasdaq and the Neuer Markt This paper examines the IPO pricing processes of two different markets,each of which employs bookbuilding methods for marketing the IPO shares. For each market we investigate two questions: Does bookbuilding serve mainly as a method for distributing shares,or also as a means for gathering information?
Nasdaq Stock Exchange president on appetite for IPOs
And,to what extent do underwriters respond in IPO pricing to any information that they obtain through bookbuilding? We find that a direct comparison of these two markets sheds light on the bookbuilding process in each.
For Nasdaq IPOs we find evidence consistent with informational rents being earned by investors for providing information during bookbuilding. On the Neuer Markt there is no such evidence. Instead,we find evidence consistent with rents being paid for information that helps underwriters to set indicative price ranges prior to bookbuilding.
The two markets differ further in how underwriters