Abstract:
This paper studies the effect of bank relationships on underwriter choice in the U.S. corporate-bond underwriting market following the 1989 commercial-bank entry. I find that bank relationships have positive and significant effects on a firm's underwriter choice, over and above their effects on fees. This result is sharply stronger for junk-bond issuers and first-time issuers. I also find that there is a significant fee discount when there are relationships between firms and commercial banks. Finally, I find that serving as arranger of past loan transactions has the strongest effect on underwriter choice, whereas serving merely as participant has no effect.
Keywords: Investment Banking, Universal Banking, Bank Relationships, Underwriting Market, Bank Competition
Date posted: August 04, 2004
; Last revised: October 11, 2006
Suggested Citation
Yasuda, Ayako, Do Bank Relationships Affect the Firm's Underwriter Choice in the Corporate-Bond Underwriting Market?. Journal of Finance, Vol. 60, No. 3, pp. 1259-92, June 2005. Available at SSRN: http://ssrn.com/abstract=571054
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