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Abstract: 

Governments have several options when contemplating financial advice prior to a bond sale. Among their choices are financial advisors who also work as underwriters and advisors whose only business is advising governments. In this study, we determine how this distinction affects issuers when choosing a method of sale. We find, on average and all else being equal, that issuers using independent financial advisors are significantly more likely to choose a competitive sale method. When financial advisors are associated more closely with one underwriter, however, or when they are themselves underwriters, their clients are more likely to choose negotiated sales.

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Affiliations:  1: University of Connecticut; 2: University of Connecticut.