IPO Mechanisms, Share Allocations and Monitoring

Chiang, S. J., Liu, W. V., and Chang, Y. S. 2005. IPO Mechanisms, Share Allocations and Monitoring. NTU Management Review, 15 (2): 001-024

Sue-Jane Chiang, Assistant Professor, Department of Business Administration, Fu Jen Catholic University
Victor W. Liu, Professor, Department of Business Management, National Sun Yat-Sen University
Yue-Shan Chang, Professor, Department of Finance, National Sun Yat-Sen University

Abstract

In this paper, we analyzed the effect of different underwriting mechanisms on the share allocations and corporate governance. By adopting an analytical model, we studied currently two underwriting mechanisms in Taiwan. We found that when maximizing social welfare and attracting external governance, the mechanism with partial public offering and partial auction is better than the mechanism with partial public offering and partial book building. In addition, a mechanism with partial public offering and partial auction is not optimal unless the risk tolerances of small investors and large investors are the same.  


Keywords

IPO mechanisms Share allocations Monitoring Corporate governance


Recommended for you

NTU Management Review No. 1, Sec. 4, Roosevelt Road, Taipei, 10617 Taiwan
3F, Bldg. 1, College of Management, National Taiwan University

TEL: +886-2-33661026  +886-2-33665404  

E-mail: ntupmcenter@ntu.edu.tw

Subsidized by Research Institute for the Humanities and Social Science, Ministry of Science and Technology, Executive Yuan.

Subscription