Ottonello, Giorgio, Nagler, Florian. 2017. Structural Changes in Corporate Bond Underpricing. FMA Conference Boston, Boston , United States/USA, 11.10-14.10.
BibTeX
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.
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Status of publication | Published |
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Affiliation | WU |
Type of publication | Paper presented at an academic conference or symposium |
Language | English |
Title | Structural Changes in Corporate Bond Underpricing |
Event | FMA Conference Boston |
Year | 2017 |
Date | 11.10-14.10 |
Country | United States/USA |
Location | Boston |
URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2896758 |
JEL | G12, G32 |
Associations
- People
- Ottonello, Giorgio (Former researcher)
- External
- Nagler, Florian (Bocconi University and IGIER, Italy)
- Organization
- Institute for Financial Research IN (Details)
- Research areas (ÖSTAT Classification 'Statistik Austria')
- 5358 Corporate finances (Details)