Abstract

http://ssrn.com/abstract=491722
 
 

References (22)



 
 

Citations (19)



 


 



Competition in Investment Banking


Katrina Ellis


Government of the Commonwealth of Australia - Australian Prudential Regulation Authority (APRA)

Roni Michaely


Cornell University - Samuel Curtis Johnson Graduate School of Management; Interdisciplinary Center (IDC)

Maureen O'Hara


Cornell University - Samuel Curtis Johnson Graduate School of Management

March 2006


Abstract:     
We construct a comprehensive measure of overall investment banking competitiveness for follow-on offerings that aggregates the various dimensions of competition such as fees, pricing accuracy, analyst recommendations, distributional abilities, market making prowess, debt offering capabilities, and overall reputation. The measure allows us to incorporate trade-offs that investment banks may use in competing for new or established clients. We find that firms who seek a higher reputation underwriter face relatively non-competitive markets. In contrast, firms who switch to similar-quality underwriters enjoy more intense competition among investment banks which manifests in lower fees and more optimistic recommendations. Investment banks do compete vigorously for some clients, with the level of competition related to the likelihood of gaining or losing clients. Finally, investment banks not performing up to market norms are more likely to be dropped in the follow-on offering.

Number of Pages in PDF File: 34

Keywords: Investment banking, equity offerings, underwriting, analyst recommendations, market making

JEL Classification: G24, G32

working papers series


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Date posted: March 26, 2005  

Suggested Citation

Ellis, Katrina and Michaely, Roni and O'Hara, Maureen, Competition in Investment Banking (March 2006). Available at SSRN: http://ssrn.com/abstract=491722 or http://dx.doi.org/10.2139/ssrn.491722

Contact Information

Katrina Ellis (Contact Author)
Government of the Commonwealth of Australia - Australian Prudential Regulation Authority (APRA) ( email )
400 George Street
Sydney, NSW 2000
Australia
Roni Michaely
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
431 Sage Hall
Ithaca, NY 14853
United States
607-255-7209 (Phone)
607-254-4590 (Fax)
HOME PAGE: http://www.johnson.cornell.edu/faculty/profiles/Michaely/
Interdisciplinary Center (IDC)
P.O. Box 167
Herzliya, 46150
Israel
Maureen O'Hara
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
Ithaca, NY 14853
United States
607-255-3645 (Phone)
607-255-5993 (Fax)
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