Conflict of interest in commercial bank security underwritings: Canadian evidence

Are Universal Banks Better Underwriters? Evidence from the Last Days of the Glass-Steagall Act

“…17 Hebb and Fraser (2002) show evidence of certification effects by commercial banks when studying the Canadian 15 Gande et al (1999) provide further evidence on the effects of the entry of Section 20 subsidiaries in the security underwriting market, showing that they have favored the reduction of underwriter spreads and ex-ante yields, and proportionally more so for lower-rated and smaller issues. 16 A related issue is studied by Narayanan et al (2004), who show that, in order to signal that they are not willing to exploit potential conflicts of interest to their advantage, banks acting as underwriters to their clients predominantly co-manage with a high reputation non-lending institution.…”

Commercial Banks in Investment Banking

“…See, for example, Ber, Yafeh, and Yosha (2001) for evidence from Israel, Hebb and Fraser (2002) for evidence from Canada, Konishi (2002) for evidence from Japan, and Hebb and Fraser (2003) for evidence from the United Kingdom. See, for example, Ber, Yafeh, and Yosha (2001) for evidence from Israel, Hebb and Fraser (2002) for evidence from Canada, Konishi (2002) for evidence from Japan, and Hebb and Fraser (2003) for evidence from the United Kingdom.…”

Investment dealers' ways of working: Integrating compensation with relational capital

“…The research department, under law, is independent of the deal-making process (CSI, 2003a). Over time, a body of literature has emerged focusing on how each of these departments, independently, play the role they do in stock market transactions (Hebb & Fraser, 2002).…”

“…The very nature of investment dealers, as one-stop-shopping centers for corporate financing and stock market trading, has been viewed by commentators and industry regulators as vulnerable to conflict of interest (Thornton, 2002). However, a recent study on the subject finds little evidence of actual conflict of interest for full-service investment dealers and banks (Hebb & Fraser, 2002), the reason being the stringent regulations that are pursued within the securities industry (DFC, 2002).…”

“…Although investment dealers play a significant role in determining enterprise capitalization, surprisingly little is known about their ways of working. A review of the financial services literature indicates a strong focus on understanding investment decision making (Hebb & Fraser, 2002; International Federation of Stock Exchanges [IFSE], 2004) with little attention given to the characteristics of investment dealers and their employing organization. In fact, both scholars and practitioners (De Bondt, 1998;Endlich, 2001;Lewis, 1992) suggest that the industry is viewed as having a highly secretive nature, which creates significant barriers for the pursuit of research into enterprise culture and personal style.…”