Do the equity holding and soundness of bank underwriters affect issue costs of SEOs?

Do the Use of Proceeds Disclosure and Bank Characteristics Affect Bank Underwriters’ Certification Roles?

“…This market segment accounts for 47.69% of the overall issues from 2000 to 2007. These results are consistent with those of Suzuki (2010).…”

“…In Models 4 and 5, the estimated coefficients of the variable Main Bank are not significantly associated with the announcement returns. This result is consistent with those of Suzuki (2010) and Takaoka and McKenzie (2006). We assume that the bank is exogenously determined.…”

“…Furthermore, although we find a significant negative post‐issue performance for the sample of investment houses, the post‐issue performance of the bank underwriter sample is not statistically negative. These results are consistent with the empirical literature that demonstrates the existence of the certification effect in the SEO market (Duarte‐Silva, 2010; and Suzuki, 2010). 5 However, if the issuers disclose that they intend to use the proceeds to repay their bank loans, bank underwriting is not significantly associated with the SEO announcement returns or with the post‐issue performance.…”

“…However, we also find that whether the lead underwriter is a main bank is not associated with the SEO announcement return or with the post‐issue performance. These results imply that the Japanese main bank system is not related to the certification and conflict of interest effects, which is consistent with the findings of Suzuki (2010) and Takaoka and McKenzie (2006).…”

The role of co-managers in reducing flotation costs: Evidence from seasoned equity offerings

“…The results indicate that commercial banks as co-managers do not improve the certification ability of the syndicate in that bond yields are not significantly different between hybrid syndicates and others. Suzuki (2010), however, finds that banks holding loans from issuers have a negative effect on price discounts and no effect on underwriting fees, which is consistent with certification. The overall findings of Chaplinsky and Erwin (2009) suggest it has been difficult for banks to achieve economies of scope in underwriting as evidenced by loss of market share.…”