FIN-03-039 |
NYU Stern School of Business |
December 2003
Alexander Ljungqvist, Felicia Marston and William J. Wilhelm, Jr.
ABSTRACT
We investigate directly whether analyst behavior
influenced the likelihood of banks winning underwriting mandates for
a sample of 16,625 U.S. debt and equity offerings sold between
December 1993 and June 2002. We control for the strength of the
issuer’s investment-banking relationships with potential competitors
for the mandate, prior lending relationships, and the endogeneity of
analyst behavior and the bank’s decision to provide analyst coverage.
We find no evidence that aggressive analyst recommendations or
recommendation upgrades increased their bank’s probability of
winning an underwriting mandate after controlling for analysts’
career concerns and bank reputation. Our findings might be
interpreted as suggesting that bank and analyst credibility are
central to resolving information frictions associated with
securities offerings.
Alexander Ljungqvist
Institution: Stern School of Business, New York University
Phone: (212) 998-0304
Fax: (212) 995-4233
Email: aljungqv@stern.nyu.edu
Home Page: http://www.stern.nyu.edu/~aljungqv
Felicia Marston
Institution: McIntire School of Commerce, University of Virginia
William J. Wilhelm, Jr.
Institution: McIntire School of Commerce, University of Virginia
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