Journal of Banking & Finance Vol. 35 No. 5 2011
The role of co-managers in reducing flotation costs: Evidence from seasoned equity offerings
Abstract
We examine the effect on expected flotation costs of including co-managers in the underwriting syndicate. We consider five components of SEO flotation costs: announcement returns, underpricing, the probability of withdrawals, offering delays, and underwriting spreads. The results show that the characteristics of co-managers participating in syndicates have significant effects on flotation costs, while the effect of the number of co-managers is largely insignificant. Our results are consistent with the notion that highly reputable underwriters and commercial banks serving as co-managers serve a certification role, reducing information asymmetries and, as a result, lowering SEO flotation costs.
- DOI
- 10.1016/j.jbankfin.2010.09.023
- Volume
- 35
- Issue
- 5
- Pages
- 1041-1056
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib