Does it pay to be loyal? An empirical analysis of underwriting relationships and fees

Timothy R. Burch, Vikram Nanda, Vincent Warther

Research output: Contribution to journalArticle

43 Scopus citations


We examine underwriting fees for repeat issuers of new securities to determine the relation between loyalty to an underwriting bank and the fees charged. For a sample of offers over the 1975-2001 period, we find that loyalty is associated with lower fees for common stock offers, consistent with valuable relationship capital being built through loyalty. For debt offers, however, we find the opposite pattern, consistent with relationship capital not being as valuable. For both offer types, firms that graduate to higher-quality banks face lower fees. Firms that are more likely to be switching banks to improve analyst coverage face higher fees for common stock offers, but not for debt offers.

Original languageEnglish (US)
Pages (from-to)673-699
Number of pages27
JournalJournal of Financial Economics
Issue number3
StatePublished - Sep 1 2005



  • Firm loyalty
  • Relationship capital
  • Seasoned offers
  • Underwriting

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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