yIssuance Overpricing of China's Corporate Debt Securities
Journal of Financial Economics
; 2021.
Article
in English
| ScienceDirect | ID: covidwho-1272533
ABSTRACT
We document issuance overpricing of corporate debt securities in China, which is robust across subsamples with different credit ratings, maturities, and issuers. This phenomenon contrasts with underpricing of equity and debt securities in Western countries and reflects China's distinct institutional environment. The average overpricing dropped from 7.44 basis points to 2.41 basis points after the government prohibited underwriters from using rebates in issuances in October 2017. By analyzing overpricing before and after the rebate ban and across different issuers and underwriters, we uncover two channels for underwriters, who compete for future underwriting business, to drive up overpricing rebates and self-purchases.
Full text:
Available
Collection:
Databases of international organizations
Database:
ScienceDirect
Language:
English
Journal:
Journal of Financial Economics
Year:
2021
Document Type:
Article
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