Decentralized Investment Banking: The Case of Discount Dividend-Reinve stment and Stock-Purchase Plans

Myron Scholes and Mark A. Wolfson

No 3093, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Discount dividend-reinvestment and stock-purchase plans allow shareholders to capture part of the underwriting fees incurred in new stock offerings and save sponsoring firms some of the usual underwriting costs. We tested the degree to which individual investors can profitably serve this investment banking function by implementing simple investment/trading strategies designed to capture the discounts and distribute the shares in the market. The large profits earned by our strategies raise serious questions about why it takes firms so long to raise the target level of capital and why many eligible shareholders do not participate in these discount plans.

Date: 1989-09
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published as Journal of Financial Economics, September 1989.

Downloads: (external link)
http://www.nber.org/papers/w3093.pdf (application/pdf)

Related works:
Journal Article: Decentralized investment banking: The case of discount dividend-reinvestment and stock-purchase plans (1989)
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:3093

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w3093

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 ().