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Competitive versus Negotiated Underwriting of Public Utility Debt

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Author Info
Edward A. Dyl
Michael D. Joehnk
Abstract

The question as to whether competitive bidding or negotiated underwriting is the least-cost method for distributing new issues of public utility bonds remains largely unresolved. This study analyzes the costs on such new issues during the period from January, 1972, through August, 1974. The results indicate that, in general, competitive bidding was the least-cost method of distributing public utility obligations during this period. An analysis of the relationship between issue size, underwriting arrangement (i.e., competitive versus negotiated), and underwriters' charges does, however, suggest that negotiated underwriting may be the preferable alternative in certain circumstances.

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Publisher Info
Article provided by The RAND Corporation in its journal Bell Journal of Economics.

Volume (Year): 7 (1976)
Issue (Month): 2 (Autumn)
Pages: 680-689
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Handle: RePEc:rje:bellje:v:7:y:1976:i:autumn:p:680-689

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  1. Michel Habib & Alexander Ljungqvist, 1999. "Underpricing and Entrepreneurial Wealth Losses in IPOs: Theory and Evidence," OFRC Working Papers Series 1999fe03, Oxford Financial Research Centre. [Downloadable!]
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