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Eurobond underwriter spreads

  • Neil Esho
  • Michael G. Kollo
  • Ian G. Sharpe

We examine the determinants of underwriter spreads on straight/fixed rate Eurobonds issued by US firms between 1990 and 1998. We find that underwriter spreads are influenced by: (i) the governing law as it influences the timely and orderly renegotiation of contract terms, with bonds governed by English law having significantly lower spreads; (ii) the distribution mechanism, with spreads higher on public issues than private placements; (iii) underwriter reputation, with more reputable underwriters charging higher spreads; and (iv) the choice of currency, with spreads higher in the less frequently used currencies and/or in currencies where underwriting activities are more concentrated. Copyright The Authors Journal compilation (c) 2006 AFAANZ.

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Article provided by Accounting and Finance Association of Australia and New Zealand in its journal Accounting and Finance.

Volume (Year): 46 (2006)
Issue (Month): 1 ()
Pages: 71-95

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Handle: RePEc:bla:acctfi:v:46:y:2006:i:1:p:71-95
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