Working Paper: NBER ID: w26344
Authors: Charles W. Calomiris; Yehuda Izhakian; Jaime F. Zender
Abstract: 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.
Keywords: Underwriter Reputation; Seasoned Equity Offerings; Adverse Selection; Information Production
JEL Codes: D82; G14; G32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Underwriter Reputation (G24) | Price Stabilization (E64) |
| Underwriter Reputation (G24) | Price Impact of Bought Offering (G19) |
| Underwriter Reputation (G24) | Price Outcomes for Fully Marketed Deals (D49) |
| Matching Controls (C52) | Reputation Effects (D83) |
| Endogenous Matching (C78) | Observed Outcomes (C90) |