Distance still matters: Evidence from municipal bond underwriting

• 成果类型: Article
• 署名作者: Butler, Alexander W.
• 署名单位: University of Texas System; University of Texas Dallas
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn002
• 发表日期: 2008
• 页码: 763
• 关键词: information; INVESTMENT; COMPETITION; geography; banking; MODEL

摘要

Using a sample of municipal bond offerings, I find that local investment banks have substantial comparative and absolute advantages over nonlocal counterparts--locals charge lower fees and sell bonds at lower yields. Local investment banks' strongest comparative advantage is at underwriting bonds with higher credit risk and bonds not rated by rating agencies. These findings suggest that high-risk bonds and nonrated bonds are more difficult to evaluate and market, and that investment banks with a local presence are better able to assess soft information and place difficult bond issues.