Bookbuilding: How Informative Is the Order Book?

Francesca Cornelli*, David Goldreich

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

118 Scopus citations


We examine the institutional bids submitted under the bookbuilding procedure for a sample of international equity issues. We find that information in bids which include a limit price, especially those of large and frequent bidders, affects the issue price. Oversubscription has a smaller but significant effect for IPOs. Public information affects the issue price to the extent that it is reflected in the bids. Oversubscription and demand elasticity are positively correlated with the first-day aftermarket return, and demand elasticity is negatively correlated with aftermarket volatility. Our results support the view that bookbuilding is designed to extract information from investors.

Original languageEnglish (US)
Pages (from-to)1415-1443
Number of pages29
JournalJournal of Finance
Issue number4
StatePublished - Aug 2003

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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