Universal Banking and Conflicts of Interest: Evidence from German Initial Public Offerings

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Universal Banking and Conflicts of Interest: Evidence from German Initial Public Offerings

Please use this identifier to cite or link to this item: http://hdl.handle.net/10355/8912

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Title: Universal Banking and Conflicts of Interest: Evidence from German Initial Public Offerings
Author: Klein, Peter G.; Zoeller, Kathrin
Date: 2003-09-24
Publisher: Social Science Research Network
Citation: Social Science Research Network, 2003.
Abstract: This paper investigates conflicts of interest associated with relationship banking. Using a sample of 270 German initial public offerings (IPOs), we ask if universal-bankunderwritten IPOs perform differently from IPOs underwritten by specialized investment banks. We find that universal-bank affiliation is correlated with higher first-day returns (underpricing) but uncorrelated with long-term performance. This suggests that underpricing compensates for potential conflicts of interest. The results also suggest that preexisting bank relationships, rather than issuer characteristics, may determine the choice of underwriter.
URI: http://hdl.handle.net/10355/8912

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