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Underwriter Reputation, Issuer–Underwriter Matching, and SEO Performance

Published online by Cambridge University Press:  28 September 2021

Charles W. Calomiris Open the ORCID record for Charles W. Calomiris [Opens in a new window] ,
Yehuda Izhakian Open the ORCID record for Yehuda Izhakian [Opens in a new window]  and
Jaime F. Zender Open the ORCID record for Jaime F. Zender [Opens in a new window]
Charles W. Calomiris
Affiliation:
Columbia University Business School cc374@columbia.edu
Yehuda Izhakian
Affiliation:
Baruch College Zicklin School of Business yud@stern.nyu.edu
Jaime F. Zender*
Affiliation:
University of Colorado Boulder Leeds School of Business
*
jaime.zender@colorado.edu (corresponding author)
Rights & Permissions [Opens in a new window]

Abstract

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The role of underwriters is altered in new seasoned equity offering deal types in which the offering follows quickly after its announcement. Controlling for the endogenous matching between issuing firms and underwriters, we find increased underwriter reputation mitigates the immediate price impact of announcing an accelerated bookbuilt offering, exacerbates the price impact of announcing a bought offering, and has no immediate price impact for fully marketed deals. In contrast, underwriter reputation positively affects price outcomes for fully marketed deals around the offer date. Reputation effects are not apparent in the absence of controlling for the endogenous matching.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 57 , Issue 6 , September 2022 , pp. 2444 - 2483
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

The authors are very grateful to Tony Cookson for extensive discussions. The authors also thank an anonymous referee, Rob Dam, Shaun Davies, Kathleen Hanley, Jarrad Harford (the editor), Katie Moon, Brian Waters, and participants at the Leeds Finance Brown Bag seminar for helpful comments. Belinda Chen provided excellent research assistance. Izhakian acknowledges hosting by the Stern School of Business, New York University.

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