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Effect of Underwriter Prestige on the Interest Cost of Municipal Bond Offerings
Author(s) -
Roden Peyton Foster,
Bassler John
Publication year - 1996
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1996.tb00891.x
Subject(s) - underwriting , issuer , prestige , business , bond , market segmentation , actuarial science , investment banking , sample (material) , municipal bond , investment (military) , finance , marketing , political science , linguistics , philosophy , chemistry , chromatography , politics , law
The authors use tombstones from Investment Dealers' Digest to develop continuous and bracket prestige measures of underwriters in the municipal bond market. The measures are used in multivariate analysis of 409 offerings to examine the relationship between net interest cost to the issuer and prestige of the lead underwriter. Multiple regression analysis reveals that issuers in the sample do not receive statistically significant positive benefits from using prestigious underwriters. The authors note that their results are consistent with segmentation of the market for municipal bonds.