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Conference Paper
Tying knots: lending to win equity underwriting business
This article examines the practice of ?tying,? which occurs when an underwriter lends to an issuer around the time of a public securities offering. We examine whether there are efficiencies from tying lending and underwriting which lead to benefits for issuers and underwriters. We find evidence consistent with tying occurring for issues when there are informational economies of scope from combining lending and underwriting. Firms benefit from tying through lower financing costs, as tied issuers receive lower underwriter fees on seasoned equity offerings and discounted loan yield spreads. ...
Conference Paper
On sales, loan contracting, and lending relationships
Conference Paper
Information asymmetries and the effects of banking mergers of firm-bank relationships
This study examines the effects of mergers between commercial banks and investment banks on firm-bank relationships and the pricing of loan contracts, focusing on the role of information asymmetries. I find that, prior to a public securities issuance, junk rated firms are more likely to switch lenders to a merged commercial-investment bank when their existing lenders are pure commercial banks. Borrowers that issue public securities and are in local lending relationships are less likely to switch lenders after their bank merges with an investment bank. Also, when issuing public debt, ...