Laux, Christian; Walz, Uwe - Center for Financial Studies - 2006
tying lending and underwriting helps to overcome this dilemma. First, risky debt in tied deals works as a bond to increase … underwriting incentives. Second, with limitations on contracting, tying reduces the underwriting rents as the additional incentives … the rent in the underwriting business and to transfer informational benefits to the client. Thus, tying is a double edged …