The value of investment banking relationships: Evidence from the collapse of Lehman brothers

Loading...
Thumbnail Image
Issue Date
2012-02
Embargo End Date
Authors
Fernando, Chitru S.
Megginson, William L.
May, Anthony D.
Advisor
Citation

Fernando C.S., Megginson W.L., and May A.D. 2012. "The value of investment banking relationships: Evidence from the collapse of Lehman brothers". Journal of Finance.67 (1): 235-270.

Abstract

We examine the long-standing question of whether firms derive value from investment bank relationships by studying how the Lehman collapse affected industrial firms that received underwriting, advisory, analyst, and market-making services from Lehman. Equity underwriting clients experienced an abnormal return of around –5%, on average, in the 7 days surrounding Lehman's bankruptcy, amounting to $23 billion in aggregate risk-adjusted losses. Losses were especially severe for companies that had stronger and broader security underwriting relationships with Lehman or were smaller, younger, and more financially constrained. Other client groups were not adversely affected.

Table of Content
Description
Click on the DOI link below to access the article (may not be free).
publication.page.dc.relation.uri
DOI