Investment Banker Reputation and the Performance of Seasoned Equity Issues

Robyn McLaughlin, Assem Safieddine and Gopala K. Vasudevan

Financial Management, 2000, vol. 29, issue 1

Abstract: We study the relation between investment banker reputation and announcement-period returns and between banker reputation and three-year post-issue holding-period returns for firms that conducted seasoned equity offerings (SEOs) between 1980 and 1994. We find a positive relation overall between investment banker reputation and announcement-period returns but no significant relation between investment banker reputation and long-run post-issue stock price performance. We also design an empirical model to predict the prestige of the issuer’s underwriter. We find that announcement-period returns are significantly related to banker prestige for issuers with high levels of information asymmetry that go against type to use a high-prestige investment banker.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:fma:fmanag:mclaughlin00

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