Title

Market Structure, Changing Incentives, and Underwriter Certification

Document Type

Article

Publication Date

2005

Publication Title

Journal of Financial Research

First Page

403

Last Page

419

DOI

http://dx.doi.org/10.1111/j.1475-6803.2005.00131.x

Abstract

Early studies find that higher quality underwriters are associated with lower underpricing; however, more recent evidence suggests the opposite relation. By controlling for influences associated with the changing market structure of the underwriter industry, I provide a potential explanation for this conflict, that is, that higher quality underwriters do certify initial public offerings, resulting in lower underpricing. However, effects associated with increasing market shares tend to offset certification benefits, particularly for issues underwritten by the largest investment banks.

Rights

Version of record can be found through Wiley.