Journal of Financial Economics Vol. 86 No. 2 2007
Bank relationships and underwriter competition: Evidence from Japan
Abstract
I examine the effects of bank relationships on underwriter choice in the Japanese corporate bond market following the 1993 deregulation. Bank relationships have significant positive effects on a firm's underwriter choice. Relationship firms receive a small but significant fee discount and, consistent with the mitigating effect of competition on hold-up costs, multiple-relationship firms receive a significantly deeper discount than single-relationship firms. Bank shareholding alone negatively affects underwriter choice, whereas shareholding together with loans has significantly more positive effects than loans alone. Finally, existing relationships reduce a Japanese firm's switching probability by 32%, in contrast to only 6% for U.S. firms.
- DOI
- 10.1016/j.jfineco.2006.08.006
- Volume
- 86
- Issue
- 2
- Pages
- 369-404
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref