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An Empirical Examination of Investment Banking Reputation Measures

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  • Carter, Richard B
  • Dark, Frederick H

Abstract

This paper empirically examines the explanatory power of investment banking reputation measures. One of these measures, a nineteen-tier indicator of underwriter reputation, is determined by the relative position of the underwriter's name within the tombstone announcements of security offerings. An alternative measure assigns four ranks according to the investment banking bracket of the underwriter. This "bracket" measure is considerably easier to create than the "tombstone" measure. The authors employ both measures in identical initial public offering empirical models and assess their relative performance. In all of the models tested, the tombstone measure appears to be superior. Moreover, they find that, unlike the bracket measure, the tombstone reputation indicator significantly explains the initial returns to initial public offerings even when a measure of ex post uncertainty is included in the model. Copyright 1992 by MIT Press.

Suggested Citation

  • Carter, Richard B & Dark, Frederick H, 1992. "An Empirical Examination of Investment Banking Reputation Measures," The Financial Review, Eastern Finance Association, vol. 27(3), pages 355-374, August.
    • Handle: RePEc:bla:finrev:v:27:y:1992:i:3:p:355-74
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    Cited by:

    1. Dunbar, Craig G., 2000. "Factors affecting investment bank initial public offering market share," Journal of Financial Economics, Elsevier, vol. 55(1), pages 3-41, January.
    2. Mirjana Pejić Bach & Berislava Starešinić & Mislav Ante Omazić & Ana Aleksić & Sanja Seljan, 2020. "m-Banking Quality and Bank Reputation," Sustainability, MDPI, vol. 12(10), pages 1-18, May.
    3. Surendranath Jory & Jeff Madura, 2007. "Equity Offerings by Firms That Emerged from Bankruptcy," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 12(2), pages 1-22, Fall.
    4. Dunbar, Craig G., 1997. "Overallotment option restrictions and contract choice in initial public offerings," Journal of Corporate Finance, Elsevier, vol. 3(3), pages 251-275, June.
    5. Monica C. Higgins & Ranjay Gulati, 2003. "Getting Off to a Good Start: The Effects of Upper Echelon Affiliations on Underwriter Prestige," Organization Science, INFORMS, vol. 14(3), pages 244-263, June.
    6. K. Gleason & J. Johnston & J. Madura, 2008. "What factors drive IPO aftermarket risk?," Applied Financial Economics, Taylor & Francis Journals, vol. 18(13), pages 1099-1110.

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