When the Issuer is an Underwriter: The Costs and Benefits of Underwriter Choice

66 Pages Posted: 23 Jun 2016 Last revised: 19 Mar 2021

See all articles by David Becher

David Becher

Drexel University

Rachel Gordon

Towson University

Jennifer L. Juergens

Cornerstone Research, Inc.

Date Written: March 16, 2021

Abstract

This paper examines the debt underwriting relationship of publicly-traded U.S. banks (investment and commercial banks). In nearly 30% of their debt issuances, banks hire an external underwriter. This selection is related to our newly developed bank-specific motivations, including underwriting capacity, distribution networks, ranking and the bank’s current competitive position, in addition to traditional needs such as expertise and information sharing. We find that the decision to use another underwriter has implications for bank issuers at the deal level as well as at the firm level, and ultimately can affect a bank’s reputation, networking, and profitability.

Keywords: Capital markets; debt issuance; underwriting; reputation; banks

JEL Classification: G21, G24, G32, D22

Suggested Citation

Becher, David and Gordon, Rachel and Juergens, Jennifer L., When the Issuer is an Underwriter: The Costs and Benefits of Underwriter Choice (March 16, 2021). Available at SSRN: https://ssrn.com/abstract=2798752 or http://dx.doi.org/10.2139/ssrn.2798752

David Becher (Contact Author)

Drexel University ( email )

3220 Market Street
1127 Gerri C LeBow Hall
Philadelphia, PA 19104
United States
215-895-2274 (Phone)
215-895-2295 (Fax)

Rachel Gordon

Towson University ( email )

8000 York Road, ST 100A
Towson, MD 21204
United States

Jennifer L. Juergens

Cornerstone Research, Inc.

2001 K Street NW
North Tower, Suite 800
Washington, DC 20006
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
192
Abstract Views
1,134
Rank
283,718
PlumX Metrics