An Investigation of Underwriting Fees for Asset-Backed Securities

Abstract

This paper uses a proprietary database of asset-backed securities (ABS) to make two contributions to the literature: A detailed descriptive analysis of the ABS market and an investigation of the factors that influence underwriting fees in the ABS market. Using methodology similar to that used in Livingston and Miller (2000), evidence is provided that that the relation between underwriter prestige and underwriter fees is positive. Further, evidence is provided that the relation between underwriter fees and loyalty is positive, indicating that the more an issuer uses the same underwriter, the higher the fees that the issuer is charged.

Investors' Risk Perception of Automobile Abs After Implementation of Major Accounting Disclosure Requirements

“…These findings conclude that rethinking the overdependence hypothesis may be warranted. Puskar and Gottesman (2009) examine the relationship of underwriting fees charged to ABS issuers with (i) underwriter prestige; and (ii) underwriter loyalty, using a proprietary database of US ABS. The results suggest a positive relationship existed in both cases, namely, issuers pay higher underwriting fees to have their issues brought to market by more prestigious underwriters measured by percentage of total market share.…”