Ottonello, Giorgio, Nagler, Florian. 2017. Structural Changes in Corporate Bond Underpricing. FMA Conference Boston, Boston , United States/USA, 11.10-14.10.

RIS

@CONFERENCE{Ottonello2017,
title = {Structural Changes in Corporate Bond Underpricing},
author = {Giorgio Ottonello and Florian Nagler},
year = {2017},
address = {Boston },
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2896758},
language = {EN},
misc = {FMA Conference Boston},
abstract = {We show that in the aftermath of the financial crisis underpricing of corporate bonds increases because underwriters systematically place bonds to relationship investors. We argue that the post-crisis decrease in inventory-carrying capacities incentivizes underwriters to secure future intermediation by outsourcing bonds to related investors, who require in exchange increased underpricing. We isolate the strength of underwriter-investor relations by employing a novel empirical identification strategy based on institutional investors’ past holdings of underwriters’ own bonds. The relationship channel fully captures the increase in underpricing from the pre-crisis to the post-crisis period. Furthermore, it shows that relationship investors are net sellers of newly issued bonds in the post-crisis period. The results are informative about implications of post-crisis regulation. },
}