IPO procedures in Europe : the development of practices and perspectives

Abstract

International audienceBecause IPO mechanisms determine the initial trading price and the allocation of newly listed firms’ shares, they have financial and strategic consequences for shareholders. For that reason, it is of interest to analyse the relative advantages and disadvantages of the different procedures made available to candidate firms. A survey of listing practices in fifteen European countries shows the increasing prominence of book-building. Although this IPO mechanism is probably the only way to go public for young and risky firms that could not list otherwise, auctions run by exchanges may enhance the competitiveness and efficiency of the primary markets for issuers and investors. Further, in the prospect of integrated European stock markets, it appears necessary to pursue the harmonisation of IPO procedures and listing requirements that has started with the enforcement of the Prospectus Directive

Auctions versus bookbuilding: The effects of IPO regulation in Japan

“…The Second Sections are for mid‐sized companies. Growth Sections or New Markets are for early‐stage, high growth companies with lower listing requirements (Boutron et al., 2006). The three largest stock exchanges in Japan (Tokyo, Osaka & Nagoya) had First and Second Sections for different company types.…”

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

“…Regulated stock markets usually consist of three separate areas. There are the First Sections for large, established companies, the Second Sections for mid-sized companies and growth sections or new markets for early-stage, high growth companies with lower listing requirements (Boutron, Gajewski, Gresse & Labégorre, 2006). The three largest stock exchanges in Japan (Tokyo, Osaka and Nagoya) had First and Second Sections for different company types (Japan Securities…”