Conflict of interest in universal banking: Bank lending, stock underwriting, and fund management

• 成果类型: Article
• 署名作者: Ber, H; Yafeh, Y; Yosha, O
• 署名单位: Tel Aviv University; Bank of Israel; Hebrew University of Jerusalem
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(00)00051-9
• 发表日期: 2001
• 页码: 189-218
• 关键词: universal banking; Conflict of interest; bank underwriting and fund management; initial public offerings

摘要

Using a newly constructed data set on Israeli Initial Public Offering (IPO) firms in the 1990s, we study costs and benefits of universal banking. We find that a firm whose equity was underwritten by a bank affiliated underwriter, when the same bank was also a large creditor of the firm in the IPO year, exhibits significantly better than average post-issue accounting performance, but that its stock performance during the first year following the IPO is considerably lower than average. When an investment fund managed by the same bank is heavily involved in the IPO as buyer of the newly issued equity, the stock performance during the first year following the IPO is even lower. This, together with negative first day returns, is indication of IPO overpricing. We interpret these findings as evidence that universal banks: use their superior information regarding client firms to Boat the stock of the 'cherries'. not the 'lemons' (as measured by post-issue accounting performance), but that bank managed funds pay too much for bank underwritten IPOs, at the expense of the investors in the funds. These results suggest that there is conflict of interest in the combination of bank lending, underwriting, and fund management. (C) 2001 Published by Elsevier Science B.V.