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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27008
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| Title: | The Long-Run Behavior of Debt and Equity Underwriting Spreads |
| Authors: | Kim, Dongcheol
Palia, Darius
Saunders, Anthony |
| Issue Date: | 1-Jan-2003 |
| Series/Report no.: | S-FI-03-02 |
| Abstract: | This paper is the first to look at the long-run (30-year) behavior of
underwriting spreads in the markets for corporate equity and debt.
Specifically, we analyze the determinants of underwriting spreads on
corporate bond issues, secondary equity offerings and initial public
offerings over the period 1970-2000. We explain the time-varying
cross-sectional behavior of these spreads by analyzing three sets of
variables or factors: macro (systematic) factors, investment banking
market structure factors and issuer specific characteristics. We also
analyze the relationship between the direct costs (underwriting spreads)
and indirect costs (underpricing) of new issues. Among our many results
we find an apparent decline in spreads over time, an increased
clustering in spreads for both IPOs and SEOs, the dominance of issuer-
specific characteristics in explaining spreads, and a relatively weak
linkage between the direct and indirect costs of issuance. |
| URI: | http://hdl.handle.net/2451/27008 |
| Appears in Collections: | Financial Institutions
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