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Conflict of interest issues may arise as a result of the issuance of fee-contract incentives by stock companies to investment banks. Using a contract choice model to determine possible losses, it was discovered that losses increase by as much as 16.7% of the tender offer's value. Losses can be reduced from 16.7 to 3.4% by including the investment banker reputation capital variable in the model.

An analysis of the relation between investment bankers and their clients is presented. The analysis focuses on fee contracts covered by tender offers and applies data from such offers spanning 1978 to 1986. It is shown that fee contracts are effective in concluding tender offers. However, the method of contracting is only a partial solution for agency problems encountered in investment banker relations.

Convertible debt offerings are one of the nation's significant funding sources. Firms, for instance have been recorded as having issued $3.7 billion-$9.3 billion annually in a five-year period spanning 1988-1992. A study was conducted to investigate 828 convertible debt issuers from 1980-1993 in terms of long-term operating and stock price performance. Among other results, it was found that firms that issued equity during the three years prior to the convertible debt offering posted larger operating performance declines after the offering.