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Investment Banker Reputation and the Performance of Seasoned Equity Issues

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  • Robyn McLaughlin
  • Assem Safieddine
  • Gopala K. Vasudevan

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.

Suggested Citation

  • Robyn McLaughlin & Assem Safieddine & Gopala K. Vasudevan, 2000. "Investment Banker Reputation and the Performance of Seasoned Equity Issues," Financial Management, Financial Management Association, vol. 29(1), Spring.
  • Handle: RePEc:fma:fmanag:mclaughlin00
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    References listed on IDEAS

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    1. Michael S. Rozeff, 1998. "Stock Splits: Evidence from Mutual Funds," Journal of Finance, American Finance Association, vol. 53(1), pages 335-349, February.
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    Cited by:

    1. Raili Roo, 2011. "Disclosure Discourse: A Shift in Estonian Public Companies’ Interim Report Commentaries during the Turn towards Recession," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology.

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