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 | : 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 | : 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 | : 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 | : Marius Hamer |
| Publisher | : GRIN Verlag |
| Total Pages | : 73 |
| Release | : 2008 |
| Genre | : Business & Economics |
| ISBN | : 3638903699 |
Diploma Thesis from the year 2007 in the subject Business economics - Investment and Finance, grade: 1,3, European Business School - International University Schlo Reichartshausen Oestrich-Winkel, 80 entries in the bibliography, language: English, abstract: This paper aims at establishing a link between the average level of initial return of IPO shares, existing underpricing explanations and the dot-com bubble. In years prior to the boom of the new economy, underpricing was explained by various theories, which have extensively been developed since decades. However, in the years 1998 to 2001 IPOs were overly underpriced, leading to assumptions about behavioural aspects and investor irrationality. Analysing a comprehensive dataset of 371 IPOs on the Frankfurter B rse between 1997 and 2007, this paper aims at providing evidence that the observed lower levels of initial returns in recent years can indeed be aligned with existing theories on the basis of rational behaviour of market participants. Firstly, the IPO process and its major participants will be presented followed by a review of relevant studies on the IPO phenomenon. In the next step, established underpricing theories are recapitulated. A descriptive analysis of the data sample points out the particularities concerning the company and transaction characteristics of the sample firms. In a last step, a regression analysis relates various proxies for information asymmetry to established underpricing theories. It gives reason to believe that the irrationality at the turn of the century has vanished and that underpricing can again be explained by established theories.
| 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 | : Charles W. Calomiris |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
The role of underwriters is altered in new seasoned equity offering deal types in which the offering follows quickly after its announcement. Controlling for the endogenous matching between issuing firms and underwriters, we find increased underwriter reputation mitigates the immediate price impact of announcing an accelerated bookbuilt offering, exacerbates the price impact of announcing a bought offering, and has no immediate price impact for fully marketed deals. In contrast, underwriter reputation positively affects price outcomes for fully marketed deals around the offer date. Reputation effects are not apparent in the absence of controlling for the endogenous matching.
| Author | : Suman Neupane |
| Publisher | : |
| Total Pages | : |
| Release | : 2017 |
| Genre | : |
| ISBN | : |
Using data from the unique setting of Indian IPOs, this study examines the underwriter-investor relationship based on underwriter reputation. We find that high reputation and low reputation underwriters have strong relationships with different sets of investors. While large institutional investors participate early in IPOs managed by high reputation underwriters, high net worth investors appear to do the same in IPOs managed by low reputation underwriters. The varying nature of relationships with investors also has important consequences for IPO pricing. Our analysis of the setting of the offer price shows that reputation matters greatly for high reputation underwriters. Low reputation underwriters, on the other hand, appear to price aggressively and set high offer prices even when institutional participation is negligible.
