Abstract

http://ssrn.com/abstract=800184
 
 

References (23)



 
 

Citations (34)



 


 



Scaling the Hierarchy: How and Why Investment Banks Compete for Syndicate Co-Management Appointments


Alexander Ljungqvist


New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Research Institute of Industrial Economics (IFN)

Felicia C. Marston


University of Virginia - McIntire School of Commerce

William J. Wilhelm


University of Virginia - McIntire School of Commerce

August 10, 2007


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.

Number of Pages in PDF File: 46

Keywords: Underwriting syndicates, Commercial banks, Glass-Steagall Act, Global Settlement, Analyst behavior

JEL Classification: G21, G24

working papers series


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Date posted: September 15, 2005  

Suggested Citation

Ljungqvist, Alexander and Marston, Felicia C. and Wilhelm, William J., Scaling the Hierarchy: How and Why Investment Banks Compete for Syndicate Co-Management Appointments (August 10, 2007). Available at SSRN: http://ssrn.com/abstract=800184 or http://dx.doi.org/10.2139/ssrn.800184

Contact Information

Alexander Ljungqvist (Contact Author)
New York University (NYU) - Department of Finance ( email )
Stern School of Business
44 West 4th Street, Suite 9-160
New York, NY 10012-1126
United States
212-998-0304 (Phone)
212-995-4220 (Fax)
HOME PAGE: http://pages.stern.nyu.edu/~aljungqv
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Research Institute of Industrial Economics (IFN) ( email )
Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden
Felicia C. Marston
University of Virginia (UVA) - McIntire School of Commerce ( email )
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
804-924-1417 (Phone)
William J. Wilhelm
University of Virginia (UVA) - McIntire School of Commerce ( email )
Rouss & Robertson Halls, East Lawn
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
434-924-7666 (Phone)
434-924-7074 (Fax)
HOME PAGE: http://gates.comm.virginia.edu/wjw9a/
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References:  23
Citations:  34

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