Competition and the Structure of Vertical Relationships in Capital Markets

45 Pages Posted: 13 Nov 2008

See all articles by John Asker

John Asker

UCLA

Alexander Ljungqvist

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Research Institute of Industrial Economics (IFN)

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Date Written: April 2008

Abstract

We document that firms appear disinclined to share underwriters with other firms in the same industry. We show that this disinclination is evident only when firms engage in product-market competition. This leads us to suggest that concerns about information leakage may motivate the patterns we see in the data. We discuss how these effects help us understand how the investment banking industry is structured, how banks compete, and how prices are set. At each step we exploit sources of exogenous variation that correspond to specific margins on which the effects of interest directly influence incentives and choices.

Keywords: Investment banking, Securities underwriting, Competition, Bank deregulation, Glass-Steagall Act;, Commercial banks

Suggested Citation

Asker, John William and Ljungqvist, Alexander, Competition and the Structure of Vertical Relationships in Capital Markets (April 2008). NYU Working Paper No. FIN-07-030, Available at SSRN: https://ssrn.com/abstract=1300777

John William Asker (Contact Author)

UCLA ( email )

8283 Bunche Hall
Los Angeles, CA 90095-1477
United States

Alexander Ljungqvist

Stockholm School of Economics ( email )

111 60 Stockholm
Sweden

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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