The Review of Corporate Finance Studies Vol. 7 No. 2 2018

Investment-Banking Relationships: 1933–2007

Alan D. Morrison¹; Carola Schenone²; Aaron Thegeya³; William J. Wilhelm²

¹ Saïd Business School, University of Oxford · ² McIntire School of Commerce University of Virginia · ³ International Monetary Fund

Abstract

We study the evolution of investment-banking relationships from 1933 to 2007. Relationship exclusivity and client concerns for the state of their banking relationships were strong through the first part of our sample period but then entered a period of sharp decline beginning around 1970. We interpret the bank-client relationship as an informal governance mechanism for curbing opportunistic behavior in a weak contracting environment and examine how technological change aggravated conflicts of interest within investment banks and between banks and their clients. This perspective sheds light on why trust between banks and their clients now appears to be in short supply.Received March 2, 2018; editorial decision June 11, 2018 by Editor Paolo Fulghieri.

DOI

10.1093/rcfs/cfy004

Volume

7

Issue

2

Pages

194-244

Language

en

Sources

bibtex:phds-export.bib openalex crossref

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