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| Author: | Smith, R. L. |
| Title: | The choice of issuance procedure and the cost of competitive and negociated underwriting : an examination of the impact of rule 50. |
| Journal: | Journal of Finance
1987 : JUL, VOL. 42:3, p. 703-729 |
| Index terms: | UNDERWRITING SHAREHOLDERS SHARE PRICES PUBLIC SERVICES |
| Language: | eng |
| Abstract: | Evidence suggests that firms choose negotiated issuance over competitive despite its apparently higher net interest cost. This is shown to arise partly from failure to correct for a selectivity bias in the choice of issuance procedures. Two-stage analysis is used in a model that includes qualitative and limited dependent variables to re-estimate the net interest cost difference between competitive and negotiated issues. The choice of issuance procedure is shown to be consistent with shareholder wealth maximization. |
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