Issuance Overpricing of China's Corporate Debt Securities / Yi Ding, Wei Xiong, Jinfan Zhang.

Format:

Book

Author/Creator:

Ding, Yi (Financial analyst)

Contributor:

Xiong, Wei.

Zhang, Jinfan.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26815.

NBER working paper series no. w26815

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

We document issuance overpricing of corporate debt securities in China, which contrasts with underpricing of equity and debt securities in Western countries. The phenomenon in China is robust across subsamples of issuances with different credit ratings, maturities, issuer types, and issuing history, reflecting the distinct institutional environment and issuance process in China's market for corporate debt securities. 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.

Notes:

March 2020.

Print version record