Universal Banking, Asset Management, and Stock Underwriting
William C. Johnson
Suffolk University - Sawyer School of Management
U.S. Securities and Exchange Commission
European Financial Management, Vol. 15, Issue 4, pp. 703-732, September 2009
This paper examines institutions that underwrite IPOs and have asset management divisions from 1993 through 1998. We provide evidence that these firms use asset management funds as vehicles to help them earn more equity underwriting business. We also show that asset managers affiliated with IPO underwriters use their superior information about their own institution's IPOs to earn annualised market adjusted returns 7.6% above asset managers of firms who did not underwrite the IPO. Superior future returns by asset managers who trade affiliated IPOs are dependent on the information environment for the IPO and the underwriter reputation rank.
Number of Pages in PDF File: 30
Date posted: October 8, 2009