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Underwriter Reputation And Aftermarket Performance Of Closed‐End Funds

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  • Lena Chua Booth

Abstract

I find a positive relation between underwriter reputation and the initial and long‐run aftermarket performance of closed‐end funds. This relation persists even after controlling for fund characteristics, types, and investment strategies. The positive relation between underwriter reputation and initial returns supports the notion that prestigious investment bankers tend to promote a price run‐up in the immediate aftermarket to enhance their reputation with the issuers and the investors. The better long‐run performance for funds underwritten by prestigious underwriters suggests that prestigious underwriters protect their reputation by underwriting only high‐quality issues that will perform well in the long run.

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  • Lena Chua Booth, 2004. "Underwriter Reputation And Aftermarket Performance Of Closed‐End Funds," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 27(4), pages 539-557, December.
    • Handle: RePEc:bla:jfnres:v:27:y:2004:i:4:p:539-557
    DOI: 10.1111/j.1475-6803.2004.00107.x
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    Cited by:

    1. Daniels, Kenneth N. & Vijayakumar, Jayaraman, 2007. "Does underwriter reputation matter in the municipal bond market?," Journal of Economics and Business, Elsevier, vol. 59(6), pages 500-519.
    2. Liu, Wenzhen & Wu, Wenfeng, 2023. "Underwriter reputation and the pricing of securities: Evidence from asset-backed securities," International Review of Financial Analysis, Elsevier, vol. 88(C).

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