Underwriter reputation and the quality of certification: Evidence from high-yield bonds

Andres C, Betzer A, Limbach P (2014)
Journal of Banking & Finance 40: 97-115.

Zeitschriftenaufsatz | Veröffentlicht | Englisch
 
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Autor*in
Andres, Christian; Betzer, André; Limbach, PeterUniBi
Abstract / Bemerkung
This paper provides primary evidence of whether certification via reputable underwriters is beneficial to investors in the corporate bond market. We focus on the high-yield bond market in which certification of issuer quality is most valuable to investors owing to low liquidity and issuing firms’ high opacity and default risk. We find bonds underwritten by the most reputable underwriters to be associated with significantly higher downgrade and default risk. Investors seem to be aware of this relation, as we further find the private information conveyed via the issuer-reputable underwriter match to have a significantly positive effect on at-issue yield spreads. Our results are consistent with the market-power hypothesis, and contradict the traditional certification hypothesis and underlying reputation mechanism.
Erscheinungsjahr
2014
Zeitschriftentitel
Journal of Banking & Finance
Band
40
Seite(n)
97-115
ISSN
03784266
Page URI
https://pub.uni-bielefeld.de/record/2958467

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Andres C, Betzer A, Limbach P. Underwriter reputation and the quality of certification: Evidence from high-yield bonds. Journal of Banking & Finance. 2014;40:97-115.
Andres, C., Betzer, A., & Limbach, P. (2014). Underwriter reputation and the quality of certification: Evidence from high-yield bonds. Journal of Banking & Finance, 40, 97-115. https://doi.org/10.1016/j.jbankfin.2013.11.029
Andres, C., Betzer, A., and Limbach, P. (2014). Underwriter reputation and the quality of certification: Evidence from high-yield bonds. Journal of Banking & Finance 40, 97-115.
Andres, C., Betzer, A., & Limbach, P., 2014. Underwriter reputation and the quality of certification: Evidence from high-yield bonds. Journal of Banking & Finance, 40, p 97-115.
C. Andres, A. Betzer, and P. Limbach, “Underwriter reputation and the quality of certification: Evidence from high-yield bonds”, Journal of Banking & Finance, vol. 40, 2014, pp. 97-115.
Andres, C., Betzer, A., Limbach, P.: Underwriter reputation and the quality of certification: Evidence from high-yield bonds. Journal of Banking & Finance. 40, 97-115 (2014).
Andres, Christian, Betzer, André, and Limbach, Peter. “Underwriter reputation and the quality of certification: Evidence from high-yield bonds”. Journal of Banking & Finance 40 (2014): 97-115.

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