Peter Oh (William Mitchell, moving to Pittsburgh) has posted his latest paper on SSRN:  The Dutch Auction Myth.  I saw Peter present this paper at the Midwest Law & Economics Association conference last Fall, and I look forward to reading the paper.  Here is the (heart-wrenching) abstract:

The initial public offering process is under assault. Critics of this process have woven a complex set of interconnected objections to the orthodox method for conducting IPOs, pricing of shares, and allocating them to preferred investors. These critics instead point to online auctions as an alternative IPO method that can provide more equitable access, efficient prices, and egalitarian allocations. These claims rest on Google's IPO and W.R. Hambrecht & Co.'s OpenIPO mechanism, which are impure variants of the descending-bid or Dutch auction (Dutch IPO). This article assesses the empirical and theoretical case for Dutch IPOs. The first data set is from Google's IPO, which featured peculiarities that delimit its utility as a case study. The remaining data sets are from OpenIPOs and the Mise en Vente, an auction-based mechanism prevalent in France. The results fail to vindicate Dutch IPO supporters' primary claims, which perilously rely upon interpretative data from the anomalous two-year internet bubble period. Moreover, economic and financial analyses of Dutch IPOs reveal ways in which they may be susceptible to fraud and manipulation that bookbuilding is not. Ultimately, claims of the Dutch IPO's superiority over bookbuilding at best are unproven and at worst fail to appreciate certain risks.

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