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Universal Banking, Asset Management, and Stock Underwriting
Author(s) -
Johnson William C.,
MariettaWestberg Jennifer
Publication year - 2009
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1468-036x.2008.00475.x
Subject(s) - underwriting , initial public offering , business , reputation , equity (law) , asset (computer security) , stock (firearms) , finance , intangible asset , asset management , financial system , monetary economics , economics , mechanical engineering , social science , computer security , sociology , political science , computer science , law , engineering
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.