Resumen de Partial auction, pricing information and price adjustment in the IPO's aftermarket: an empirical study of TAIEX-listing firms
The present study examines the introduction of partial auction on speed of price adjustment in the Initial Public Offering's (IPO) aftermarket in Taiwan. From a paired comparison between before/after introducing partial auction sub-samples of the IPO firms, as expected, it is found that the average trading days of stock prices needed for reaching equilibrium is significantly smaller in the 'issues after introducing partial auction' sub-period, when compared with the 'issues before introducing partial auction' sub-period. Within the post-partial-auction sub-period, it is found that the average trading days of stock prices needed for reaching equilibrium is somewhat smaller in the 'issues with partial auction' subgroup when compared with the 'issues without partial auction' subgroup, but, when the observation period is extended to 3 months, the difference as expected disappears. More importantly, the average number of days of completing adjustment for both 'issues with partial auction' and 'issues without partial auction' subgroups are shortened as a result of the introduction of partial auction when compared with their counterpart in the pre-partial-auction sub-period. When 'firm size' and 'book-to-market ratio' are added in company with three other explanatory variables in a regression analysis, the inference that the introduction of the partial auction speeds up the price adjustment in the aftermarket remains intact. The present study therefore concludes that the speed of adjustment quickens after introducing auctions mechanism into Taiwan IPO market.
