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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/26981

Title: Scaling the Hierarchy: How and Why Investment Banks Compete for Syndicate Co-Management Appointments
Authors: Ljungqvist, Alexander
Marston, Felicia C.
Wilhelm Jr., William J.
Keywords: Underwriting syndicates
Commercial banks
Glass-Steagall Act
Global Settlement
Analyst behavior
Issue Date: 29-Sep-2005
Series/Report no.: S-FI-05-02
Abstract: We investigate the empirical puzzle why banks pressured their analysts to provide aggressive assessments of issuing firms during the 1990s when doing so apparently had little positive effect on their chances of receiving lead-management appointments and ultimately led to regulatory penalties and costly structural reform. We show that aggressively optimistic research can attract co-management appointments and that co-management appointments eventually lead to more lucrative lead-management opportunities. Our results suggest a potential unintended anticompetitive effect of the Global Settlement if forcing greater separation of research and investment banking diminishes co-management opportunities for (and thereby potential competition from) marginal competitors in securities underwriting, especially in the debt markets.
URI: http://hdl.handle.net/2451/26981
Appears in Collections:Financial Institutions

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