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The Reputable Underwriting Matching in Corporate Bond Issuances: Evidence for Non-financial Bonds

In: Bank Funding, Financial Instruments and Decision-Making in the Banking Industry

Author

Listed:
  • Santiago Carbó-Valverde

    (Bangor University)

  • Pedro J. Cuadros-Solas

    (Universidad de Granada)

  • Francisco Rodríguez-Fernández

    (Universidad de Granada)

Abstract

This paper provides an insight into the role of underwriter reputation in debt markets and analyzes the bonds features with reference to underwriter reputation. We present an overview of the corporate bonds markets in Europe during 2007–2013 that argues in favor of the existence of differences in bond terms based on underwriters’ reputation. Using a sample of 1,196 non- financial corporate bonds issued in 18 European countries from 2007 to 2013, we find that European corporate bonds are statistically different by underwriter reputation in bond size, maturity, callability, and collateralization. Specifically, more reputable underwriters place bonds with larger proceeds, longer maturity, and including a call option. Our findings confirm that firms and underwriters are not randomly matched in debt markets; underwriters’ reputation plays a role in the allocation of bonds.

Suggested Citation

  • Santiago Carbó-Valverde & Pedro J. Cuadros-Solas & Francisco Rodríguez-Fernández, 2016. "The Reputable Underwriting Matching in Corporate Bond Issuances: Evidence for Non-financial Bonds," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Santiago Carbó Valverde & Pedro Jesús Cuadros Solas & Francisco Rodríguez Fernández (ed.), Bank Funding, Financial Instruments and Decision-Making in the Banking Industry, chapter 5, pages 95-115, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-319-30701-5_5
    DOI: 10.1007/978-3-319-30701-5_5
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