The market for new issues of municipal bonds: The roles of transparency and limited access to retail investors
I examine how transparency and interdealer trading affects prices investors pay in municipal bond offerings. Real-time trade reporting for municipal bonds started January 31, 2005. The dispersion of purchase prices fell sharply at that time. There was little impact on average markups for most trades, but they increased for purchases of more than $100,000. Bonds often pass through a series of dealers before being placed with a buy-and-hold investor. As the interdealer trades progress, trade sizes decline and trade prices rise. Markups on investor purchases increase with the amount of interdealer trading before the trade.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Darrell Duffie & Semyon Malamud & Gustavo Manso, 2009.
"Information Percolation With Equilibrium Search Dynamics,"
Econometric Society, vol. 77(5), pages 1513-1574, 09.
- Darrell DUFFIE & Semyon MALAMUD & Gustavo MANSO, . "Information Percolation with Equilibrium Search Dynamics," Swiss Finance Institute Research Paper Series 09-02, Swiss Finance Institute.
- Bessembinder, Hendrik & Maxwell, William & Venkataraman, Kumar, 2006. "Market transparency, liquidity externalities, and institutional trading costs in corporate bonds," Journal of Financial Economics, Elsevier, vol. 82(2), pages 251-288, November.
- Lawrence E. Harris & Michael S. Piwowar, 2006. "Secondary Trading Costs in the Municipal Bond Market," Journal of Finance, American Finance Association, vol. 61(3), pages 1361-1397, 06.
- Bruce Ian Carlin & Gustavo Manso, 2011. "Obfuscation, Learning, and the Evolution of Investor Sophistication," Review of Financial Studies, Society for Financial Studies, vol. 24(3), pages 754-785.
- Richard C. Green, 2007. "Presidential Address: Issuers, Underwriter Syndicates, and Aftermarket Transparency," Journal of Finance, American Finance Association, vol. 62(4), pages 1529-1550, 08.
- Richard C. Green & Dan Li & Norman Schürhoff, 2010. "Price Discovery in Illiquid Markets: Do Financial Asset Prices Rise Faster Than They Fall?," Journal of Finance, American Finance Association, vol. 65(5), pages 1669-1702, October.
- Richard Green & Burton Hollifield & Norman Schurhoff, .
"Dealer Intermediation and Price Behavior in the Aftermarket for New Bond Issues,"
GSIA Working Papers
2005-E56, Carnegie Mellon University, Tepper School of Business.
- Green, Richard C. & Hollifield, Burton & Schurhoff, Norman, 2007. "Dealer intermediation and price behavior in the aftermarket for new bond issues," Journal of Financial Economics, Elsevier, vol. 86(3), pages 643-682, December.
- Haoxiang Zhu, 2012. "Finding a Good Price in Opaque Over-the-Counter Markets," Review of Financial Studies, Society for Financial Studies, vol. 25(4), pages 1255-1285.
- Biais, Bruno & Green, Richard, 2007.
"The Microstructure of the Bond Market in the 20th Century,"
IDEI Working Papers
482, Institut d'Économie Industrielle (IDEI), Toulouse.
- Bruno Biais & Richard C. Green, . "The Microstructure of the Bond Market in the 20th Century," GSIA Working Papers 2005-E57, Carnegie Mellon University, Tepper School of Business.
- Hendrik Bessembinder & William Maxwell, 2008. "Markets: Transparency and the Corporate Bond Market," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 217-234, Spring.
When requesting a correction, please mention this item's handle: RePEc:eee:jfinec:v:106:y:2012:i:3:p:492-512. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.