We study how institutional investors utilize potentially biased information by analyzing the effect of IPO underwriters' earnings forecasts on investors' bidding behaviors in Chinese IPO auctions. Despite the presence of upward biases in underwriters' earnings forecasts, we nd that investors'...

Using a large proprietary IPO bidding dataset from China, we examine whether there is information production in auctioned IPOs in which uniform price applies and the underwriter has no allocation discretion. Our IPO-level and IPO-bidder-level analyses suggest that institutions bid in IPO...

Due to the well-known efficiency--rent extraction trade-off, the optimal mechanism in a pure screening environment (e.g., revenue maximization in auctions or cost minimization in procurement) typically calls for distortions in allocative efficiency when agents possess private information at the...