Jennifer L. Juergens

Underwriter Choice When the Issuer Is an Underwriter

This paper examines the previously undocumented debt underwriting relationship for banks. Publicly-traded investment and commercial banks (“banks”) are unique in that they are the only firms capable of underwriting their own securities. Banks, however, hire a rival in nearly 30% of their debt issuances and do so extensively across bank size, quality, and type. The decision to use a rival is related to expertise, information sharing, as well as our newly-proposed bank-specific (distribution networks, capacity, and ranking) motivations and is costly to issuers. These results provide new evidence of banks’ underwriter choice and the pervasive use of rivals.

Are Firm-Advisor Relationships Valuable? A Long-Term Perspective

We examine long-term firm-advisor relations using an extended history of debt, equity, and merger transactions. Hard-to-value firms are more likely to maintain dedicated advisor relations (underwriters or merger advisors). Firms that retain predominantly one advisor over their entire transaction history pay higher underwriting/advisory fees, have inferior deal terms, and have lower analyst coverage relative to those that employ many advisors. When we condition on a firm’s information environment as a catalyst for long-term advisor retention, riskier firms obtain better terms when they utilize a variety of advisors, but informationally-opaque firms do not. Our results suggest that only some firms benefit from long-term advisor retention.

How Much Do Analysts Influence Each Other's Forecasts?

This paper develops and applies a new approach for disentangling the influence of analysts on each others earnings forecasts from the effects of correlated information shocks. We estimate that, on average, each cent a new forecast by an analyst is above (below) another analysts most recent forecast causes the other analyst to revise her forecast upwards (downwards) by between 0.21 and 0.36 cents. More reputable analysts are more influential, while those that tend to be optimistic are less influential and are influenced more by the forecasts of other analysts. We do not find support for career concerns-driven herding or anti-herding. Finally, we find that more influential analysts are more likely to subsequently be ranked as All-Stars and to move from a less to a more prestigious brokerage house, and less likely to leave the analyst profession, suggesting that influence is a desirable characteristic.

Do Acquirer CEO Incentives Impact Mergers

This paper examines the mechanisms by which acquirer CEOs are incentivized and their impact on merger decisions. We argue that the pre-merger structure of CEO wealth impacts a CEO’s risk tolerance and ultimately her willingness to undertake a merger as well as the framework of the deal. As the riskiness of CEO wealth increases (as measured by excess vega or cumulative option-based wealth), firms are more likely to become an acquirer, pay higher premiums, and experience lower post-merger performance. These results hold controlling for CEO overconfidence and cannot be attributed to firms altering incentives to induce CEOs to partake in mergers. Post financial crisis, we find both a shift in the composition of CEO pay and its relation to mergers. Overall, these results have important policy implications in the debate over optimal CEO pay as the structure by which CEOs are compensated appears to impact firm choices.