|
Archive@NYU >
Stern School of Business >
Finance Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27398
|
| Title: | Scaling the Hierarchy: How and Why Investment Banks Compete for
Syndicate Co-Management Appointments |
| Authors: | Ljungqvist, Alexander
Marston, Felicia
Wilhelm Jr., William J. |
| Keywords: | Underwriting syndicates
Commercial banks
Glass-Steagall Act
Global Settlement
Analyst behavior |
| Issue Date: | 10-Apr-2007 |
| Series/Report no.: | FIN-07-029 |
| Abstract: | We investigate why banks pressured research analysts to provide
aggressive assessments of issuing firms during the 1990s. This
competitive strategy did little to directly increase a bank’s
chances of winning lead-management mandates and ultimately led to
regulatory penalties and costly structural reform. We show that
aggressively optimistic research and even the mere provision of research
coverage for the issuer (regardless of its direction) attract
co-management appointments. Co-management appointments are valuable
because they help banks establish relationships with issuers. These
relationships, in turn, substantially increase their chances of winning
more lucrative lead-management mandates in the future. This is true even
in the presence of historically exclusive banking relationships. If
recent regulatory reforms compromise this entry mechanism, they may have
the unintended consequence of diminishing competition among securities underwriters. |
| URI: | http://hdl.handle.net/2451/27398 |
| Appears in Collections: | Finance Working Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
