Journal of Financial Economics Vol. 72 No. 3 2004
The role of syndicate structure in bank underwriting
Abstract
The re-entry of banking organizations into securities underwriting raises concerns over the possibility of banks using their lending-generated private information to benefit themselves and the issuing firm at the expense of investors. This paper illustrates the use of syndicate structure by lending banks to credibly commit against such opportunistic behavior and to exploit their proprietary information to lower issuance cost for borrowing firm issuers. We show that lending banks predominantly comanage with a high reputation nonlending underwriter. We present evidence that, relative to investment banks, comanaging issues allows lending banks to lower issuance costs for borrowing firms.
- DOI
- 10.1016/s0304-405x(03)00187-9
- Volume
- 72
- Issue
- 3
- Pages
- 555-580
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref