Article ID Journal Published Year Pages File Type
5090450 Journal of Banking & Finance 2011 17 Pages PDF
Abstract
Investment banks that develop new corporate securities systematically lead the new underwriting market despite being imitated early by equally competitive rivals. We study how innovators and imitators set underwriting fees in order to identify empirically the source of this advantage. Using data of innovative securities since 1985, we do find that innovators set systematically higher fees than imitators. This premium decreases as more issues occur, and faster for later generation products. Imitation is also quicker for later generations. This evidence supports the hypothesis that the innovator has superior skills in structuring any given issue of the new security.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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