Define: Dutch Auction

UK Accounting Glossary

Definition: Dutch Auction



Advertisement



Full Definition of Dutch Auction


A Dutch auction started in Netherlands’ farms, is a descending price auction for multiple identical items. A true Dutch auction starts with a prohibitive price and is bid lower. Early winners in a strict Dutch auction pay more and later winners pay less till the Dutch auction ends. A more familiar variant of Dutch auction starts with a reserve price. Bidders bid at or above that base price for the number of items they want. In this Dutch auction, successful bidders pay only the price of the lowest accepted bid. The Dutch auction in an Initial Public Offering (IPO) is actually a sealed-bid, uniform second-price variant. In the traditional IPO, the investment bank allocates shares at deflated prices to select investors who make a good profit in the secondary market. In the Dutch auction IPO, all applicants are on a level-playing field and allottees pay a price only slightly lower than the highest bid. The issuer collects more capital with a Dutch auction IPO.


Advertisement




Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/dutch-auction/
Modern Language Association (MLA):
Dutch Auction. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. February 16, 2020 https://payrollheaven.com/define/dutch-auction/.
Chicago Manual of Style (CMS):
Dutch Auction. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/dutch-auction/ (accessed: February 16, 2020).
American Psychological Association (APA):
Dutch Auction. PayrollHeaven.com. Retrieved February 16, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/dutch-auction/

Definition Sources


Definitions for Dutch Auction are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.