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Competing for Securities Underwriting Mandates: Banking Relationships and Analyst Recommendations
Alexander Ljungqvist New York University - Department of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI) Felicia C. Marston University of Virginia - McIntire School of Commerce William J. Wilhelm Jr. University of Oxford - Said Business School September 23, 2004 NYU, Stern School of Business Working Paper No. FIN-03-015 Abstract: We investigate directly whether analyst behavior influenced the likelihood of banks winning underwriting mandates for a sample of 16,625 U.S. debt and equity offerings sold between December 1993 and June 2002. We control for the strength of the issuer's investment-banking relationships with potential competitors for the mandate, prior lending relationships, and the endogeneity of analyst behavior and the bank's decision to provide analyst coverage. We find no evidence that aggressive analyst recommendations or recommendation upgrades increased their bank's probability of winning an underwriting mandate after controlling for analysts' career concerns and bank reputation. Our findings might be interpreted as suggesting that bank and analyst credibility are central to resolving information frictions associated with securities offerings.
Keywords: Analyst behavior, Underwriting, Commercial banks, Glass-Steagall Act JEL Classifications: G21, G24 Working Paper SeriesDate posted: July 18, 2003 ; Last revised: January 13, 2005Suggested CitationContact Information
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