Review of Financial Studies Vol. 27 No. 10 2014
Complex Securities and Underwriter Reputation: Do Reputable Underwriters Produce Better Securities?
Abstract
Conventional wisdom suggests that high-reputation banks will generally produce good securities to maintain their long-run reputation. We show with a simple model that, when securities are complex a high-reputation bank may produce assets that underperform during market downturns. We examine this possibility using a unique sample of $10.1 trillion of CLO, MBS, ABS, and CDOs. Contrary to the conventional view, securities issued by more reputable banks did not outperform but, rather, had higher proportions of capital in default.
- DOI
- 10.1093/rfs/hhu030
- Volume
- 27
- Issue
- 10
- Pages
- 2872-2925
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref