Two models of default risk are prominent in the financial literature: Merton's structural model and Altman's reduced-form model. The former has the benefit of being responsive, since the probabilities of default can continually be updated with the evolution of firms' asset values. Its main flaw...

This paper demonstrates that previous finding of commercial banks being superior to investment banks as bond underwriters is an artifact of misusing the treatment model. Although the treatment model considers endogenous selection, it does not permit selection based on the observable firm...

This paper examines underwriter reputation loss by using a sample of investment banks that have served corporate clients prior to the discovery of clients' alleged financial reporting fraud. The results indicate that underwriters lose reputation upon the filing of lawsuits against their clients....

This paper studies how competition lowers underwriters' incentive to screen clients in the bond market during 1996-2000. Responding to the intensified competition due to commercial bank entry, underwriters appeared to co-lead (work in groups) in lower quality deals but maintained their...

This paper constructs a measure of niche reputation arising from the comparative advantages of different types of underwriters. The relation between niche reputation and fees is used to gauge the impact of commercial bank entry on the market structure of bond underwriting. During 1991-1996,...

This paper studies the decision of lead investment banks to organize hybrid syndicates (commercial banks participating as co-managers) versus pure investment bank syndicates. The findings show that hybrid underwriting issues are more challenging to float. Compared to pure investment bank...

Prior research documents that commercial banks underwrite bonds with lower net yields than investment banks and concludes that commercial banks are superior underwriters. However, such a conclusion is inconsistent with the observed prominent role of investment banks in underwriting. This paper...

This study investigates the profitability of insider trading around the times when investment bankers appoint their representatives to the board of directors. If Chinese Walls at security firms are somewhat porous, then the presence of investment bankers on the boards is expected to increase the...

This Article examines the process by which overlapping interests between private bankers and government translates into influence and power mediated through the use of bank loans as instruments of foreign policy. The article suggests the market transactions often act as a matter of U.S....