Breaking down the barriers: Competition, syndicate structure, and underwriting incentives

• 成果类型: Article
• 署名作者: Shivdasani, Anil; Song, Wei-Ling
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; Louisiana State University System; Louisiana State University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2010.09.006
• 发表日期: 2011
• 页码: 581-600
• 关键词: Banking deregulation; Underwriting; certification; investment banking; financial fraud

摘要

We argue that the entry of commercial banks into bond underwriting led to the evolution of co-led underwriting arrangements and lowered the screening incentives of underwriters. Lead underwriters in co-led syndicates faced weaker incentives to screen issuer quality. In boom markets, issues underwritten by co-led syndicates were more likely to be involved in financial misrepresentation events. Underwriter incentives in co-led syndicates were particularly weak in industries where commercial banks stole substantial market share. Similar patterns do not hold in bust markets where investors are likely to engage in their own information collection efforts. Our results suggest that competition may have an adverse effect on the incentives of financial intermediaries in market environments where their information production is more valuable to investors. (C) 2010 Elsevier B.V. All rights reserved.