Do the equity holding and soundness of bank underwriters affect issue costs of SEOs? |
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Authors: | Katsushi Suzuki |
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Institution: | Tokyo University of Science, School of Management, Saitama, Kuki City, Japan |
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Abstract: | This paper examines the effects of characteristics of bank underwriters on issue costs in seasoned equity offerings in Japan following deregulation in 1999. I find that banks’ holding loans have a negative effect on price discounts and no effect on underwriting fees. However, banks’ equity holdings have no effect on discount rates and a positive effect on underwriting fees. Furthermore, issuers with unhealthy banks pay higher discount rates, are more likely to be weak in their ex-post operating performance, and are less willing to switch underwriters. I conclude that the characteristics of banks have different effects on issue costs. |
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Keywords: | G21 G24 |
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