The Role of Co-Managers in Reducing Flotation Costs: Evidence from Seasoned Equity Offerings

Posted: 30 Jun 2015

See all articles by Jin Jeon

Jin Jeon

Dongguk University

James A. Ligon

University of Alabama

Date Written: 2011

Abstract

We examine the effect on expected flotation costs of including co-managers in the underwriting syndicate. We consider five components of SEO flotation costs: announcement returns, underpricing, the probability of withdrawals, offering delays, and underwriting spreads. The results show that the characteristics of co-managers participating in syndicates have significant effects on flotation costs, while the effect of the number of co-managers is largely insignificant. Our results are consistent with the notion that highly reputable underwriters and commercial banks serving as co-managers serve a certification role, reducing information asymmetries and, as a result, lowering SEO flotation costs.

Note: processed, TOO OLD, ABSTRACT ONLY - vicki 6/30/15

Keywords: Underwriting syndicates, Flotation costs, Seasoned equity offerings

JEL Classification: G21 G24

Suggested Citation

Jeon, Jin and Ligon, James A., The Role of Co-Managers in Reducing Flotation Costs: Evidence from Seasoned Equity Offerings (2011). Journal of Banking and Finance, Vol. 35, 2011. Available at SSRN: https://ssrn.com/abstract=2624424

Jin Jeon (Contact Author)

Dongguk University ( email )

26 Pil-dong 3-ga
Jung-gu
Seoul, Seoul 100-715
Korea, Republic of (South Korea)

James A. Ligon

University of Alabama ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-6313 (Phone)
205-348-0590 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
190
PlumX Metrics