Issuance Overpricing of China’s Corporate Debt Securities

Yi Ding, Wei Xiong and Jinfan Zhang

No 26815, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We document issuance overpricing of corporate debt securities in China, which contrasts with underpricing of equity and debt securities in Western countries. The phenomenon in China is robust across subsamples of issuances with different credit ratings, maturities, issuer types, and issuing history, reflecting the distinct institutional environment and issuance process in China’s market for corporate debt securities. The average overpricing dropped from 7.44 basis points to 2.41 basis points after the government prohibited underwriters from using rebates in issuances in October 2017. By analyzing overpricing before and after the rebate ban and across different issuers and underwriters, we uncover two channels for underwriters, who compete for future underwriting business, to drive up overpricing: rebates and self-purchases.

JEL-codes: G15 G23 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-cna and nep-fmk
Note: AP CF
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published as Yi Ding & Wei Xiong & Jinfan Zhang, 2021. "Issuance overpricing of China's corporate debt securities," Journal of Financial Economics, .

Downloads: (external link)
http://www.nber.org/papers/w26815.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:26815

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w26815

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().