The Impact Of Underwriters Reputation On The Price Of Capital The Return And The Underwriter Selection
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| Author | : Ricardo Falter |
| Publisher | : GRIN Verlag |
| Total Pages | : 20 |
| Release | : 2013-12-13 |
| Genre | : Business & Economics |
| ISBN | : 3656558396 |
Bachelor Thesis from the year 2013 in the subject Business economics - Investment and Finance, grade: 8,0, Maastricht University (School of Business and Economics), language: English, abstract: This paper will try to elaborate on the different and sometimes mixed empirical results, testing the relationship between underwriter’s reputation and the price of the capital issue. Firstly, the two most cited and used ways of measuring reputation will be explained. Secondly, the relationship between reputation and issue pricing will be analysed from different perspectives. Thirdly, the existence of a relationship between reputation and fees as well as between reputation and proceeds will be proven. After that commercial and investment banks as underwriters will be compared and it will be shown that there are reasons to choose a commercial bank as an underwriter. Finally, the mechanics of how underwriters are being chosen and the reasons for switching underwriters will be analysed, before ending this study with a conclusion.
| Author | : Ricardo Falter |
| Publisher | : |
| Total Pages | : 24 |
| Release | : 2013-12 |
| Genre | : |
| ISBN | : 9783656558347 |
Bachelor Thesis from the year 2013 in the subject Business economics - Investment and Finance, grade: 8,0, Maastricht University (School of Business and Economics), language: English, abstract: This paper will try to elaborate on the different and sometimes mixed empirical results, testing the relationship between underwriter's reputation and the price of the capital issue. Firstly, the two most cited and used ways of measuring reputation will be explained. Secondly, the relationship between reputation and issue pricing will be analysed from different perspectives. Thirdly, the existence of a relationship between reputation and fees as well as between reputation and proceeds will be proven. After that commercial and investment banks as underwriters will be compared and it will be shown that there are reasons to choose a commercial bank as an underwriter. Finally, the mechanics of how underwriters are being chosen and the reasons for switching underwriters will be analysed, before ending this study with a conclusion.
| Author | : George J. Papaioannou |
| Publisher | : Academic Press |
| Total Pages | : 334 |
| Release | : 2017-07-27 |
| Genre | : Business & Economics |
| ISBN | : 0128032839 |
Underwriting Services and the New Issues Market integrates practice, theory and evidence from the global underwriting industry to present a comprehensive description and analysis of underwriting practices. After covering the regulation and mechanics of the underwriting process, it considers economic topics such as underwriting costs and compensation, the pricing of new issues, the stock price and operating performance of issuing firms, the evaluation of new issue decisions, and an analysis of the many choices issuers face in structuring new issues. Unlike other books, it systematically develops a critical perspective about underwriting practices, both in the U.S. and international markets, and with a level of detail unavailable elsewhere and an approach that reveals how financial institutions deliver underwriting services. Underwriting Services and the New Issues Market delivers an innovative and long overdue look at security issuance. Foreword by Frank Fabozzi - Covers underwriting contracts and arrangements on pricing and costs - Focuses on the financial consequences of the issuance decision for the firm - Describes and evaluates decisions regarding the features and structure of new security offerings.
| Author | : Patrick T. Harker |
| Publisher | : Cambridge University Press |
| Total Pages | : 516 |
| Release | : 2000-05-18 |
| Genre | : Business & Economics |
| ISBN | : 9780521777674 |
The efficient operation of financial intermediaries--banks, insurance and pension fund firms, government agencies and so on--is instrumental for the efficient functioning of the financial system and the fueling of the economies of the twenty-first century. But what drives the performance of these institutions in today's global environment? In this volume, world-renowned scholars bring their expertise to bear on the issues. Primary among them are the definition and measurement of efficiency of a financial institution, benchmarks of efficiency, identification of the drivers of performance and measurement of their effects on efficiency, the impact of financial innovation and information technologies on performance, the effects of process design, human resource management policies, as well as others.
| Author | : Chongyang Chen |
| Publisher | : |
| Total Pages | : 1 |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
This paper investigates how underwriter-issuer matching choices and firm risks affect the cost of equity issuance. We show that underwriter-issuer matching is not random; it reflects underwriter reputation and risk concerns, issuers' quality, and equity market conditions. We apply Heckman self-selection estimation model to control for the endogenous underwriter-issuer matching. We find that the matching choice leads to considerable heterogeneity in pricing of issuer systematic and firm-specific risks in SEO underwriting fees. Low-reputation underwriters require compensation for bearing issuer's systematic risk but not for firm-specific risk, while high-reputation underwriters do the opposite. Moreover, evidence in this paper suggests that the underwriter-issuer matching decision entails a non-linear relation between SEO spread and underwriter reputation: high- and low-reputation underwriters earn higher spreads than medium-reputation underwriters. Our findings highlight the importance of accounting for underwriter-issuer matching in assessing SEO underwriting contracts. The results are robust to alternative underwriter reputation measure, model specifications, sample periods, and different samples of firms.
| Author | : Georgi Georgiev |
| Publisher | : GRIN Verlag |
| Total Pages | : 89 |
| Release | : 2012-06 |
| Genre | : Business & Economics |
| ISBN | : 3656208905 |
Bachelor Thesis from the year 2005 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,7, Martin Luther University, 38 entries in the bibliography, language: English, abstract: The world of finance is complex. There are many aspects, which cannot be fully explained and still confuse the researchers. One of the most discussed topics is that of Initial Public Offerings (IPO) mainly because of the intricate connections between investment bankers (underwriters), issuers and buyers. This paper will try to summarize the whole process of going public and emphasize on the role of the (lead) underwriter in it. The paper discusses mainly the American "way" of going public, but the procedure is generally the same for the European market with some differences that are explained in the text. The advantages, disadvantages and the legal requirements for going public are enlightened, in order of understanding the important role, which the underwriter plays in the whole process. The structure and the legal consequences of the due diligence process are presented. The types of agreement between the underwriter and the issuer are described, with the consequences that originate from them. The ways of determining the price and the advantages and disadvantages of any of them are presented, with respect to the importance of the underwriter's role in them and the liabilities that she has. The problem with the underpricing is discussed more detailed, since this is one of the big challenges in the IPO process. Some theories that explain this phenomenon are briefly discussed, showing the mechanism that is behind the underpricing problem. Some of the unlawful allocation practices are listed, with examples that show that even the top underwriters use prohibited actions to ensure the successful completion of the IPO process. The importance of the pre-opening period for the determination of the right market price and the active participation of the underw
| Author | : Gilberto Ramos Loureiro |
| Publisher | : |
| Total Pages | : 166 |
| Release | : 2007 |
| Genre | : Corporate governance |
| ISBN | : |
Abstract: The first essay of this dissertation tests whether hiring a reputable underwriter to sponsor equity offerings of foreign firms, that occur when they cross-list on a U.S. stock exchange, is a "reputational bonding" mechanism. In line with the Bonding Hypothesis of Stulz (1999) and Coffee (1999, 2002), I find that foreign firms that cross-list in the U.S. and undertake IPOs are more likely to employ reputable underwriters if the firms come from countries with poor shareholder protection. The additional monitoring provided by reputable underwriters may help overcome the skepticism of U.S. investors, and explains the higher valuation these firms obtain after the offering. There is, however, a price to be paid for this bonding benefit. I find that issuers from countries with low shareholder protection tend to be more underpriced if they are sponsored by prestigious underwriters. In the second dissertation essay, I examine whether the decisions to raise equity and hire a reputable underwriter to conduct the offering impacts the information environment of foreign firms cross-listed on a U.S stock exchange. Using a sample of cross-listed firms from 1980 to 2004, I find that those that raise equity and hire a reputable underwriter, within three years after cross-listing, observe higher analyst coverage and more accurate earnings forecasts. Furthermore, I conclude that these improvements in the firm's information environment are likely to positively affect firm value -- the empirical evidence shows a positive relation between analyst coverage/forecast accuracy and Tobin's q. More importantly, the valuation of firms sponsored by top underwriters tends to be more sensitive to improvements in forecast accuracy. Overall, the results of this essay complement the findings of Lang et al. (2003) and shed some light on the monitoring role of reputable underwriters via their impact on firm's information environment.
| Author | : Hyoseok (David) Hwang |
| Publisher | : |
| Total Pages | : 42 |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
I investigate how a firm's underwriting relationship affects its value. Firms that rely on underwriters' reputation for equity issuance could damage themselves when the reputation is contaminated. Using firms with class action lawsuits, I demonstrate that disclosed misconduct of an underwriting client could cause investors to distrust its underwriter's due diligence and thus decrease value of the underwriter's other clients as well - underwriting spillover effect. The spillover effect is more severe for relatively opaque, cheap, and well-performed firms. It also increases the propensity of a firm to be sued, suggesting that the spillover effect is driven partially by investors' anticipation of lawsuits.
| Author | : Tim Jenkinson |
| Publisher | : Oxford University Press, USA |
| Total Pages | : 264 |
| Release | : 2001 |
| Genre | : Business & Economics |
| ISBN | : 9780198295990 |
Going Public investigates why companies routinely underprice themselves as they try to list themselves on the stock exchange. They subsequently underperform over the long-term and, in Going Public, the authors explore these 2 phenomena in plain English.
| Author | : Claus Birkenbeul |
| Publisher | : GRIN Verlag |
| Total Pages | : 89 |
| Release | : 2010-10 |
| Genre | : Business & Economics |
| ISBN | : 3640714016 |
Master's Thesis from the year 2010 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, Munich Business School University of Applied Sciences, language: English, abstract: The economical development is improving and world trade volumes are expected to recover. The recorvery process is developing constantly but slowly: Share prices have rebounded within 2009, worldwide trade volumes have recovered slightly and are expected to catch up with values from the end of 2008 during the next year (cf. OECD 2009). The world is recovering from one of the most severe economic downturns since The Great Depression. Comparing GDP volumes from the previous period at the same time, OECD countries lost up to 2%. As a logical consequence the U.S. IPO market has been affected by the economic meltdown as well. "IPO activity tends to cluster in certain time periods, thus it appears in waves, so-called hot IPO markets" (Hamer 2007, 9). From 2007 to 2008 th e number of IPOs decreased. The U.S. market broke down by more than 85% in one year. In 2007 there were 160 IPOs whereas in 2008 21 securities went public fort the first time (cf. Ritter 2010, 2). After the slowest year for IPOs since the 1970s, the market began to show signs of life again in 2009. The number of offerings increased by 21% although the offering value decreased by almost 15% (cf. PWC 2010). [...]
