We examine whether financial conglomeration enhances efficiency of capital allocation or conflicts of interest, focusing on pricing and allocation of IPO stocks in Japan. Regarding underwriting of IPO stocks, our results are consistent with the bank certification hypothesis. As for IPO...

Using a sample of 779 Japanese IPOs over the 2002-2012 period, we find a strong retail orientation in new share allocation. As for institutional allocation, the most complete universal banking form of underwriting neither advantages nor disadvantages investors in affiliated mutual funds, both...