Business, Management and Accounting
3 years ago

Bookbuilding IPOs in India lead to significantly less investor flipping.

SSRN Electronic Journal
Do Investors Flip Less in Bookbuilding than in Auction IPOs?
Suman Neupane, Krishna Paudyal, Chandra Thapa

Paper Summary

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Investors in bookbuilding IPOs in India flip their allocation less compared to auction IPOs. This is because underwriters can control allocation flexibility in bookbuilding, avoiding flippers and targeting long-term investors. Frequent investors flip significantly less in bookbuilding IPOs managed by leading underwriters and weak IPOs. Both frequent and non-frequent investors hold their shares for longer in bookbuilding IPOs than in auction IPOs. Allocation discretion allows underwriters to influence investors' behavior and use soft non-bid information in the IPO process.