Does bookbuilding really improve the efficiency of pricing IPOs?

We set out to establish how IPO listing mechanisms inform and alter investor participation in new issues and explore in what manner they can help in raising funds efficiently over a range of market conditions. Our approach is to explain how the impact of listing mechanisms can add to the debate about IPO underpricing in the face of complex interaction effects between market condition, market structure, and asymmetric information. Our empirical test bed is the China stock market and our major contribution is to demonstrate that, compared with bookbuilding, secondary market proportional offerings are most efficient in managing new issues in volatile market conditions – a finding which contradicts previously reported work