In 2004, Google launched its IPO via Dutch Auction. Different from traditional IPO process we described in handout 2, Dutch Auction allows every investor, including small investors, to submit her bids online for IPO shares. It does not involve the road show or book building from investment banks.

Googles IPO price was $85, and it opened at $100 at the first day of trading, reflecting a 17.6 percent underpricing. 83 percent of the IPOs issued between January and November 2004 experienced less underpricing than Google did. In your opinion, if Google had adopted a traditional IPO process, would Google have been able to set up a higher IPO price? Please explain.