Traders vs. Relationship Managers: Reputational Conflicts in Full-Service Investment Banks

Chen, Zhaohui, Morrison, Alan and Wilhelm, William (2014) Traders vs. Relationship Managers: Reputational Conflicts in Full-Service Investment Banks. The Review of Financial Studies, 28 (4). pp. 1153-1198.

Abstract

We present a model that explains why investment bankers struggle to manage conflicts of interest. Banks can build a type reputation for technical competence by performing complex deals that may not serve their clients' interest; on the other hand, banks can sustain a behavioral reputation by refraining from doing so. A behavioral reputation is a luxury reserved for banks that have proven their abilities. The model sheds light on conflicts between the trading and advisory divisions of investment banks, as well as the consequences of technological change for time variation in the relative strength of behavioral- and type-reputation concerns.

Item Type: Article
Keywords: reputation, investment banking, conflicts of interest, finance
Subject(s): Finance
Related URLs:
Date Deposited: 11 Mar 2014 17:17
Last Modified: 21 Feb 2017 15:06
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4998

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