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Underwriter competition in accelerated seasoned equity offerings: Evidence from Canada

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  • Gunay, Erdal
  • Ursel, Nancy

Abstract

Accelerated seasoned equity offerings (SEOs) are now the most common form of SEO in the United States, Canada and Europe. Canadian accelerated SEOs do not feature competitive bidding for underwriting mandates. Using field study data from both issuers and underwriters, as well as secondary data, we investigate underwriter competition in this market. We find competition, but not on the basis of underwriting fee. Instead underwriters compete by building, maintaining and defending relationships with issuers. These relationships benefit both parties: underwriters stabilize their deal flow, permitting them to efficiently use their established capacity, and issuers secure reliable access to underwriting services.

Suggested Citation

  • Gunay, Erdal & Ursel, Nancy, 2015. "Underwriter competition in accelerated seasoned equity offerings: Evidence from Canada," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 34(C), pages 94-110.
    • Handle: RePEc:eee:intfin:v:34:y:2015:i:c:p:94-110
    DOI: 10.1016/j.intfin.2014.11.006
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    Cited by:

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    2. Cole, Rebel & Cumming, Douglas & Li, Dan, 2016. "Do banks or VCs spur small firm growth?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 41(C), pages 60-72.
    3. Arturo Rubalcava, 2018. "Financial Impact of Canadian Bill 198 on Seasoned Equity Offerings by Canadian Firms," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 4(1), pages 43-68, January.
    4. Koerniadi, Hardjo & Krishnamurti, Chandrasekhar & Lau, Sie Ting & Tourani-Rad, Alireza & Yang, Ting, 2015. "The role of internal and external certification mechanisms in seasoned equity offerings," Journal of Multinational Financial Management, Elsevier, vol. 30(C), pages 110-127.
    5. Arturo Rubalcava, 2021. "Determinants Of Price Response To Canadian Bought Deals And Marketed Underwritten Equity Offers: Evidence Before And After The Canadian Sox," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 15(1), pages 19-32.

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    More about this item

    Keywords

    Accelerated transactions; Seasoned equity offering; Investment banking; Underwriter competition;
    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

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