Underwriter competition in accelerated seasoned equity offerings: Evidence from Canada

Erdal Gunay and Nancy Ursel

Journal of International Financial Markets, Institutions and Money, 2015, vol. 34, issue C, 94-110

Abstract: Accelerated seasoned equity offerings (SEOs) are now the most common form of SEO in the United States, Canada and Europe. Canadian accelerated SEOs do not feature competitive bidding for underwriting mandates. Using field study data from both issuers and underwriters, as well as secondary data, we investigate underwriter competition in this market. We find competition, but not on the basis of underwriting fee. Instead underwriters compete by building, maintaining and defending relationships with issuers. These relationships benefit both parties: underwriters stabilize their deal flow, permitting them to efficiently use their established capacity, and issuers secure reliable access to underwriting services.

Keywords: Accelerated transactions; Seasoned equity offering; Investment banking; Underwriter competition (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:34:y:2015:i:c:p:94-110

DOI: 10.1016/j.intfin.2014.11.006

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