The Shelf Registration of Debt and Self Selection Bias

Allen, David S.; Lamy, Robert E.; Thompson, G. Rodney

doi:10.1111/j.1540-6261.1990.tb05093.x

Cited by 35 publications

(13 citation statements)

References 8 publications

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“…None of these papers explicitly examines the pricing effect of a firm's loyalty to its bank. Several papers analyze the early effects of shelf registration in lowering underwriting fees and the cost of offerings (see Kidwell et al, 1987;Allen et al, 1990;Denis, 1991). Consistent with this evidence, we find that shelf-registered common stock offers have lower fees.…”

Section: Introductionsupporting

confidence: 84%

Does it Pay to Be Loyal? An Empirical Analysis of Underwriting Relationships and Fees

2004

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Section: Introductionsupporting

confidence: 84%

Does it Pay to Be Loyal? An Empirical Analysis of Underwriting Relationships and Fees

2004

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“…A number of studies have examined the determinants of the at-issue yield spread, which is an increasing function of the issue costs (the at-issue yield is measured by equating the net proceeds, after deducting the issue costs, with the present value of the coupon and principal payments). Allen, Lamy and Thompson (1990), Datta, Iskandar-Datta and Patel (1999), as well as other studies, have documented that the at-issue yield spread is negatively related to credit rating and positively related to bond maturity. As issue costs are an important determinant of the at-issue yield spread, these findings imply similar relations for the issue costs.…”

Section: Prior Researchmentioning

confidence: 80%

Debt Issue Costs and Issue Characteristics in the Market for U.S. Dollar Denominated International Bonds *

Melnik

Nissim

2003

Review of Finance

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This paper analyzes the issue costs and initial pricing of bonds in the international market. In particular, we investigate the determinants of three components of issue costs: underwriter fee, underwriter spread (the difference between the offering price and the guaranteed price to the issuer), and underpricing (the difference between the market price and the offering price). Total underwriter compensation increases with the bonds' credit risk and maturity, but it is insignificantly related to issue size. Interestingly, underwriters appear to price some issue characteristics directly (by adjusting the fee) and other characteristics indirectly (by setting the guaranteed price). The two compensation components (fee and spread) are negatively related to each other. We provide evidence that this tradeoff is consistent with income tax considerations, as well as with two-tier pricing by underwriters. We find no evidence of underpricing.

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“…We use SDC to determine which offerings are shelf registered. Several studies have shown that shelf registration has a negative effect on underwriting spreads and the cost of issuing equity (Kidwell, Marr, and Thompson, 1987;Allen, Lamy, and Thompson, 1990;Denis, 1991;Burch, Nanda, and Warther, 2005). We collect data on the amount of secondary shares in the offering from SDC.…”

Section: Underwriter Returnsmentioning

confidence: 99%

“…Shelf registration is only available for larger offerings, and reputable underwriters may desire shelf registered offerings due to their lower placement costs(Kidwell, Marr, and Thompson, 1987;Allen, Lamy, and Thompson, 1990;Denis, 1991).…”

mentioning

confidence: 99%

Underwriter Compensation and the Returns to Reputation

2012

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Underwriter reputation and compensation are both topics that have received considerable attention but the question of whether underwriter fee structures provide adequate incentives for investment banks to build and maintain their reputation remains unresolved. We examine this question for equity underwriting and find that underwriters with higher reputations earn significantly higher underwriting revenues. For example, underwriters with the highest Carter-Manaster (CM) reputation ranking of 9 receive around $10 million per IPO, on average, whereas underwriters with rankings below 9 receive around $3 million. When we control for differences in characteristics of issues underwritten by banks of different reputations while also accounting for endogenous matching between issuers and underwriters, we find that CM9 underwriters earn a premium of $2.6 ($2.0) million per IPO (SEO). When spreads are measured as a percentage of proceeds, CM9 IPO underwriters receive a reputational premium of 1.79 to 3.21 percentage points from an average IPO spread of 6.71% while a third of the 4.28% spread that CM9 SEO underwriters receive, on average, is attributable to their higher reputation. Overall, our findings show that a significant premium to reputation is evident for different measures of underwriter reputation and model specifications, and provide compelling evidence of statistically and economically significant returns to reputation building in equity underwriting.

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The Shelf Registration of Debt and Self Selection Bias

Cited by 35 publications

References 8 publications

Does it Pay to Be Loyal? An Empirical Analysis of Underwriting Relationships and Fees

Does it Pay to Be Loyal? An Empirical Analysis of Underwriting Relationships and Fees

Debt Issue Costs and Issue Characteristics in the Market for U.S. Dollar Denominated International Bonds *

Underwriter Compensation and the Returns to Reputation

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