Drexel Burnham Lambert's bankruptcy and the subsequent decline in underwriter fees |
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Authors: | Miles Livingston Glenn Williams |
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Affiliation: | 1. University of Florida, Gainesville, FL 32611-7168, USA;2. Florida Atlantic University, Port St. Lucie, FL 34986, USA |
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Abstract: | In the 1980s, Drexel Burnham Lambert dominated the underwriting of junk bonds with close to a 50% market share. In 1990, Drexel went bankrupt and was liquidated, and the percentage underwriting fees for junk bonds subsequently dropped dramatically. We present strong evidence that the exit of Drexel Burnham Lambert and the resulting increase in competition for market share were major contributing factors to the decline in junk bond underwriter fees. |
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Keywords: | G21 G24 |
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