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Why do firms pay high underwriting fees? SEO withdrawal, underwriter certification and CEO turnover

Author

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  • Ursel, Nancy D.
  • Zhong, Ligang

Abstract

CEO turnover increases when announced stock issues are withdrawn, even after controlling for endogeneity and firm performance. However, greater underwriter certification of a stock issue is associated with lower CEO turnover. Together, these two findings suggest that the corporate governance practice of terminating CEOs for unsuccessful offerings and the resulting managerial career concerns may help explain the puzzle that managers of issuing firms show little concern for the level of underwriting fees charged: CEOs may use underwriters to help protect their CEO positions.

Suggested Citation

  • Ursel, Nancy D. & Zhong, Ligang, 2018. "Why do firms pay high underwriting fees? SEO withdrawal, underwriter certification and CEO turnover," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 54(C), pages 98-113.
    • Handle: RePEc:eee:intfin:v:54:y:2018:i:c:p:98-113
    DOI: 10.1016/j.intfin.2017.05.009
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    Cited by:

    1. Iwasaki, Ichiro & Ma, Xinxin & Mizobata, Satoshi, 2020. "Corporate ownership and managerial turnover in China and Eastern Europe: A comparative meta-analysis," Journal of Economics and Business, Elsevier, vol. 111(C).

    More about this item

    Keywords

    CEO turnover; Withdrawn stock issues; Underwriting fee; Investment banking; Survival analysis;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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