A conceptual model of the optimal underwriting contract choice by the issuer developing

Economic Annals-ХХI: Volume 135, Issue 11-12(1), Pages: 106-109

Citation information:
Chala, Yu., & Dubovyk, S. (2013). A conceptual model of the optimal underwriting contract choice by the issuer developing. Economic Annals-XXI, 11-12(1),106-109. https://ea21journal.world/index.php/ea-v135-27/

Yulia Chala
PhD (Economics),
Associate Professor,
the Ukrainian Academy of Banking of the National Bank of Ukraine
57 Petropavlivska St., Sumy, 40030, Ukraine
737star@gmail.com

Serhiy Dubovyk
Post-Graduate Student,
the Ukrainian Academy of Banking of the National Bank of Ukraine
57 Petropavlivska St., Sumy, 40030, Ukraine
sergii.dubovyk@gmail.com

A conceptual model of the optimal underwriting contract choice by the issuer developing

Abstract. In light of the research objective, this paper analyzes the dynamics and the structure of the executed contracts under the underwriting conduction in Ukraine in 2008-2012, as well as it determines the estimation intervals of banks’ efficiency as the investment services providers (according to the dynamics of the issuers’ share prices during the «period of silence»).

The major result of this research is separation of the «efficient IBS market» and determination at which of the underwriting models (based on the «firm commitment» of the bank – model «FC», or «maximum/best efforts» of the bank – model «BE») as one of the leading investment services the offering efficiency is higher, and therefore it is more suitable for using by issuers for the domestic or foreign stock markets entering. The analysis was conducted by using the elements of the matrix theory of games.

The authors draw conclusions on selection of the priority underwriting model, as well as the time of application by the bank maximum market-maker’s (marketing) efforts to promote market-placed securities.

Keywords: Underwriting; «Firm Commitment» Model; «Best Efforts» Model; Investment Banking Services Market; Issuer of Securities; Contract

JEL Classification: G20

References

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Received 08.10.2013