The Effect of Private-Debt-Underwriting Reputation on Bank Public-Debt Underwriting

Rajesh P. Narayanan, Kasturi P. Rangan and Nanda K. Rangan

The Review of Financial Studies, 2007, vol. 20, issue 3, 597-618

Abstract: We provide evidence that commercial banks extend their reputation in underwriting syndicated loans and private placements (private debt) to their bond-underwriting activities. In the absence of bond market reputation, private-debt-market reputation enables commercial banks to win underwriting mandates from their loan clients. Furthermore, it allows them to credibly commit to investors against opportunistically using lending information and thereby deliver superior certification benefits in the form of higher issue prices relative to investment-bank underwriters. This pricing benefit is not offset by higher underwriting fees and thus results in lower total issuance costs for borrowers.

JEL-codes: G21 G28 L14 L15 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (10)

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