IPO Underpricing and Aftermarket Price Accuracy: Auctions vs. Bookbuilding in Japan

We analyse a regulatory change in the Japanese IPO market that created an abrupt shift from hybrid price-discriminatory auctions to bookbuilding. find bookbuilding leads significantly higher underpricing than auctions. Further, we evidence price accuracy tends be for The results hold under variety of OLS specifications and with regression discontinuity designs exploiting regulation. suggest interests issuers underwriters are not aligned. popularity seems puzzling this perspective.