Jaime F. Zender
Leeds School of Finance
University of Colorado at Boulder
Boulder, Colorado 80309-0419
Institutional Affiliation: University of Colorado at Boulder
NBER Working Papers and Publications
|October 2019||Underwriter Certification, Issuer-Underwriter Matching, and SEO Performance|
with Charles W. Calomiris, Yehuda Izhakian: w26344
The introduction of deal types for issues of seasoned equity in which the offer follows quickly after its announcement highlights the role of underwriter certification in the performance of SEOs. Controlling for the matching between underwriters and issuers, underwriter quality is positively related to the announcement effect in rapidly completed SEOs. For these deal types, we also find that the discount is significantly negatively related to underwriter quality. For fully marketed deals we are unable to detect any significant relation between SEO performance and underwriter quality. Issuers pay for the value provided by high-quality underwriters with higher fees.
|November 2016||Ambiguity and the Tradeoff Theory of Capital Structure|
with Yehuda Izhakian, David Yermack: w22870
We examine the importance of ambiguity, or Knightian uncertainty, in the capital structure decision. We develop a static tradeoff theory model in which agents are both risk averse and ambiguity averse. The model confirms the usual idea that increased risk—the uncertainty over known possible outcomes—leads firms to use less leverage. Conversely, greater ambiguity—the uncertainty over the probabilities associated with the outcomes—leads firms to increase leverage. Using a theoretically motivated measure of ambiguity, our empirical analysis provides results consistent with these predictions.