Document Type

Article

Publication Date

2012

Keywords

sovereign debt, sovereign bonds, transactional lawyers, reputational intermediaries, empirical research

Subject Category

Banking and Finance | Contracts | Law

Abstract

The claim that lawyers act as gatekeepers or certifiers in financial transactions is widely discussed in the legal literature. There has, however, been little empirical examination of the claim. We test the hypothesis that law firms have replaced investment banks as the gatekeepers of the market for sovereign debt. Our results suggest that hiring outside law firms sends a negative signal to the market regarding the pending issuance; a finding that is inconsistent with the thesis that outside law firms primarily play a certification role in the sovereign debt market.

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