Underwriter Choice When the Issuer Is an Underwriter

52 Pages Posted: 23 Jun 2016 Last revised: 15 May 2018

See all articles by David Becher

David Becher

Drexel University

Rachel Gordon

Towson University

Jennifer L. Juergens

Cornerstone Research

Date Written: April 11, 2018


This paper examines the debt underwriting relationship for banks. Publicly-traded investment and commercial banks (“banks”) are unique as they are the only firms capable of underwriting their own securities. In nearly 30% of their debt issuances, banks hire another underwriter and do so extensively across bank size, quality, and type. The decision to use another underwriter is related to expertise, information sharing, as well as our newly developed bank-specific (distribution networks, underwriting capacity, and ranking) motivations. The decision to use another underwriter, while likely optimal from the issuer’s perspective, is costly and nearly doubles the per-deal level of underwriting fees.

Keywords: Capital markets, debt issuance, banking, investment banks, underwriting

JEL Classification: G21, G24, G32, G38

Suggested Citation

Becher, David and Gordon, Rachel and Juergens, Jennifer L., Underwriter Choice When the Issuer Is an Underwriter (April 11, 2018). Available at SSRN: https://ssrn.com/abstract=2798752 or http://dx.doi.org/10.2139/ssrn.2798752

David Becher

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 (Contact Author)

Cornerstone Research

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

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