In human capital intensive industries where it is difficult to contract upon the training effort of skilled agents a socially suboptimal level of training may occur. We show how partnership organisations can overcome this problem by tying human and financial capital. Partnerships are opaque so...

The evidence reported in this paper suggests that institutional investors capture a large fraction of the short-run profits associated with IPOs. The favored status enjoyed by institutional investors in underpriced offerings appears, however, to carry a quid pro quo expectation that they will...

In human capital intensive industries where it is difficult to contract upon the training effort of skilled agents a socially suboptimal level of training may occur. We show how partnership organisations can overcome this problem by tying human and financial capital. Partnerships are illiquid...

Firm-commitment offerings in the U.S. are characterized by offer prices conditioned on information gleaned from indications of interest solicited from prospective investors. When such information can be used to persuade some investors to purchase shares at a price in excess of their initial...

Firms that go public produce information that influences the production decisions of their rivals as well as their own. If information-production costs are borne primarily by pioneering firms, market failures can occur in which both pioneers and followers remain private and make ill-informed...

Firm-commitment offerings in the U.S. are characterized by offer prices conditioned on information gleaned fromindications of interest solicited from prospective investors. When such information can be used to persuade some investors to purchase shares at a price in excess of their initial...

We argue that since bank loans and publicly traded sub- investment-grade debt, or junk bonds, are close substitutes for one another, the recent failure of Drexel Burnham Lambert created a competitive opportunity for commercial banks. Consistent with this hypothesis, we observe within the...

The relational contract at the heart of an investment banking relationship is valuable because it engenders and requires mutual trust in a setting where conflicts of interest are significant and are not easily resolved through formal contract. But a bank's ability to commit to a relational...

We investigate why banks pressured research analysts to provide aggressive assessments ofissuing firms during the 1990s. This competitive strategy did little to directly increase a bank s chances of winning lead-management mandates and ultimately led to regulatory penalties and costly structural...

We investigate directly whether analyst behavior influenced the likelihood of banks winning underwriting mandates for a sample of 16,625 U.S. debt and equity offerings sold between December 1993 and June 2002. We control for the strength of the issuer s investment-banking relationships with...