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Do Bank Relationships Affect the Firm's Underwriter Choice in the Corporate‐Bond Underwriting Market?

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  • AYAKO YASUDA

Abstract

This paper studies the effect of bank relationships on underwriter choice in the U.S. corporate‐bond underwriting market following the 1989 commercial‐bank entry. I find that bank relationships have positive and significant effects on a firm's underwriter choice, over and above their effects on fees. This result is sharply stronger for junk‐bond issuers and first‐time issuers. I also find that there is a significant fee discount when there are relationships between firms and commercial banks. Finally, I find that serving as arranger of past loan transactions has the strongest effect on underwriter choice, whereas serving merely as participant has no effect.

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  • Ayako Yasuda, 2005. "Do Bank Relationships Affect the Firm's Underwriter Choice in the Corporate‐Bond Underwriting Market?," Journal of Finance, American Finance Association, vol. 60(3), pages 1259-1292, June.
    • Handle: RePEc:bla:jfinan:v:60:y:2005:i:3:p:1259-1292
    DOI: 10.1111/j.1540-6261.2005.00761.x
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