Big Fish in Small Ponds: Human Capital Mobility and the Rise of Boutique Banks

59 Pages Posted: 12 Dec 2019

See all articles by Janet Gao

Janet Gao

Indiana University - Kelley School of Business

Wenyu Wang

Indiana University - Kelley School of Business - Department of Finance

Xiaoyun Yu

Indiana University - Kelley School of Business - Department of Finance; China Academy of Financial Research (CAFR)

Date Written: December 1, 2019

Abstract

We examine whether and how labor mobility in the M&A advisory industry contributes to the rise of boutique investment banks. Using a novel dataset containing individual investment bankers’ deal advising history and career paths, we find that high-performing bankers are more likely to migrate from large, bulge bracket banks to boutique banks, and that such migration is partly due to the cross-department subsidization within bulge bracket banks. The migration of high-profile bankers impairs (improves) the market share of losing (gaining) banks in those bankers’ specialized industries. These effects are not driven by bank characteristics or industry-level dynamics. Finally, we show that the rise of boutique banks is accompanied by a decline in diversifying mergers in the M&A market and higher returns to the clients they advise.

Keywords: Investment Bank, Mobility of Human Capital, Mergers and Acquisitions

JEL Classification: G24, G34, J24, J62

Suggested Citation

Gao, Janet and Wang, Wenyu and Yu, Xiaoyun, Big Fish in Small Ponds: Human Capital Mobility and the Rise of Boutique Banks (December 1, 2019). Available at SSRN: https://ssrn.com/abstract=3496076 or http://dx.doi.org/10.2139/ssrn.3496076

Janet Gao

Indiana University - Kelley School of Business ( email )

1309 East Tenth Street
Indianapolis, IN 47405-1701
United States

Wenyu Wang (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

Xiaoyun Yu

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3521 (Phone)
812-855-5875 (Fax)

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
37
Abstract Views
274
PlumX Metrics