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Universal Banking, Asset Management, and Stock Underwriting

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  • William C. Johnson
  • Jennifer Marietta†Westberg

Abstract

This paper examines institutions that underwrite IPOs and have asset management divisions from 1993 through 1998. We provide evidence that these firms use asset management funds as vehicles to help them earn more equity underwriting business. We also show that asset managers affiliated with IPO underwriters use their superior information about their own institution's IPOs to earn annualised market adjusted returns 7.6% above asset managers of firms who did not underwrite the IPO. Superior future returns by asset managers who trade affiliated IPOs are dependent on the information environment for the IPO and the underwriter reputation rank.

Suggested Citation

  • William C. Johnson & Jennifer Marietta†Westberg, 2009. "Universal Banking, Asset Management, and Stock Underwriting," European Financial Management, European Financial Management Association, vol. 15(4), pages 703-732, September.
    • Handle: RePEc:bla:eufman:v:15:y:2009:i:4:p:703-732
    DOI: 10.1111/j.1468-036X.2008.00475.x
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    References listed on IDEAS

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    Cited by:

    1. Giorgio Albareto & Andrea Cardillo & Andrea Hamaui & Giuseppe Marinelli, 2020. "Mutual funds' performance: the role of distribution networks and bank affiliation," Temi di discussione (Economic working papers) 1272, Bank of Italy, Economic Research and International Relations Area.
    2. Gajewski, Jean-François & Tran Dieu, Linh, 2021. "Determinants and performance of outsourcing in the european mutual fund market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 73(C).
    3. Wang, Xiaoxiao & Zhang, Xueyong, 2024. "Bank affiliation and timing ability of mutual funds: Evidence from China," Journal of Banking & Finance, Elsevier, vol. 163(C).
    4. Wang, Xiaoxiao, 2023. "Bank affiliation and mutual funds’ trading strategy distinctiveness," International Review of Financial Analysis, Elsevier, vol. 88(C).
    5. Jordan, Bradford D. & Liu, Mark H. & Wu, Qun, 2012. "Do investment banks listen to their own analysts?," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1452-1463.
    6. Haoyue Zhang & Dayong Lv & Wenfeng Wu, 2022. "Why do bank‐affiliated mutual funds perform better in China?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(5), pages 4755-4782, December.
    7. Ilias Anthopoulos & Christos N.Pitelis, "undated". "The Nature, Performance, Economic Impact and Regulation of Investment Banking," Working papers wpaper137, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    8. Stavros Thomadakis & Christos Nounis & Dimitrios Gounopoulos, 2012. "Long†term Performance of Greek IPOs," European Financial Management, European Financial Management Association, vol. 18(1), pages 117-141, January.
    9. Geranio, Manuela & Mazzoli, Camilla & Palmucci, Fabrizio, 2017. "The effects of affiliations on the initial public offering pricing," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 295-313.
    10. Jean-François Gajewski & Linh Tran Dieu, 2021. "Determinants And Performance Of Outsourcing In The European Mutual Fund Market," Post-Print hal-03221014, HAL.
    11. Wolfgang Bessler & Matthias Stanzel, 2009. "Conflicts of Interest and Research Quality of Affiliated Analysts in the German Universal Banking System: Evidence from IPO Underwriting," European Financial Management, European Financial Management Association, vol. 15(4), pages 757-786, September.

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