The market for new issues of municipal bonds: The roles of transparency and limited access to retail investors

Paul Schultz

Journal of Financial Economics, 2012, vol. 106, issue 3, 492-512

Abstract: I examine how transparency and interdealer trading affects prices investors pay in municipal bond offerings. Real-time trade reporting for municipal bonds started January 31, 2005. The dispersion of purchase prices fell sharply at that time. There was little impact on average markups for most trades, but they increased for purchases of more than $100,000. Bonds often pass through a series of dealers before being placed with a buy-and-hold investor. As the interdealer trades progress, trade sizes decline and trade prices rise. Markups on investor purchases increase with the amount of interdealer trading before the trade.

Keywords: Municipal bond; Dealer market; Transparency (search for similar items in EconPapers)
JEL-codes: G24 H74 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (43)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:106:y:2012:i:3:p:492-512

DOI: 10.1016/j.jfineco.2012.07.004

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