Real Effects of Investement Banking Relationships: Evidence from the Financial Crisis

Item Type Monograph (Working Paper)
Abstract

We investigate the damage to real-sector investment spending and corporate financing activities triggered by the failure of three major investment banks during the 2007-09 financial crisis. We find that corporations characterized by pre-crisis corporate investment banking relationships with troubled investment banks exhibit significantly lower post-crisis investment spending activity and securities issuance compared to corporations that were not affiliated with the troubled institutions. The effect varies systematically with the nature and strength of the investment banking relationship. Our results are robust with respect to various modifications and extensions of our empirical design (including a matched control sample) and generally inconsistent with alternative explanations unrelated to investment banking relationships.

Authors Oesch, David; Schuette, Dustin & Walter, Ingo
Language English
Keywords firm-underwriter relationship, investment banking, financial crisis, financial shocks, real effects, investment, financing, cash holdings
Subjects business studies
HSG Classification contribution to scientific community
Refereed No
Date 2014
Publisher SoF - HSG
Place of Publication St. Gallen
Series Name School of Finance Working Paper Series
Number 2014/5
Depositing User David Oesch
Date Deposited 25 Mar 2014 10:21
Last Modified 03 Sep 2015 15:30
URI: https://www.alexandria.unisg.ch/publications/230506

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Citation

Oesch, David; Schuette, Dustin & Walter, Ingo: Real Effects of Investement Banking Relationships: Evidence from the Financial Crisis. School of Finance Working Paper Series, 2014, 2014/5.

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https://www.alexandria.unisg.ch/id/eprint/230506
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