Case | HBS Case Collection | October 1999 (Revised January 2000)

W. R. Hambrecht & Co: OpenIPO

by Andre F. Perold and Gunjan D. Bhow

Abstract

OpenIPO is a new mechanism for pricing and distributing initial public offerings. The system, which is based on a Dutch auction, represents an attempt by the investment bank W.R. Hambrecht + Co. to change the manner in which IPOs are underwritten. The case provides a setting in which to discuss the existing set of institutional arrangements relating to the underwriting of IPOs, including the well-known phenomenon of the initial-day spike in price. Also provides a vehicle for discussing the informational efficiency of stock prices and the role of intermediaries and markets in providing investors with company-specific information. Can be used to talk about the issues raised by electronic trading and the distribution of securities over the Internet to relatively uninformed individuals.

Keywords: Investment Banking; Debt Securities; Stocks; Initial Public Offering; Price; Information; Auctions; Agreements and Arrangements; Distribution; Internet; Netherlands;

Citation:

Perold, Andre F., and Gunjan D. Bhow. "W. R. Hambrecht & Co: OpenIPO." Harvard Business School Case 200-019, October 1999. (Revised January 2000.)