Does Investment Bank Reputation Matter? The Influence of High Reputable Investment Banks on Stock Performance


ER B.

Journal of Money, Investment and Banking, no.25, pp.21-35, 2013 (Peer-Reviewed Journal)

  • Publication Type: Article / Article
  • Publication Date: 2013
  • Journal Name: Journal of Money, Investment and Banking
  • Journal Indexes: EconLit
  • Page Numbers: pp.21-35
  • Karadeniz Technical University Affiliated: Yes

Abstract

In this article, we investigate the investment bank reputational effect for the Turkish IPOs during the 1990-2010. In so doing, short-run and long-run performances of the IPO stocks at the Istanbul Stock Exchange are analyzed by using Meggisson-Weiss investment bank reputational measure. Market-adjusted initial returns are used as a short-term performance while cumulative abnormal returns and buy and hold returns are used as long-term performance. We document that investment bank reputation carries a significant effect on the buy and hold returns over two years (506 days) and three years (765 days) periods. However, we did not find any significant relations between investment bank reputation and the market-adjusted returns and cumulative returns. Besides investment bank reputational role, we also used some other control variables to investigate their effect on the stock performances. We found that only management ownership showed a significant but negative effect on the short-run performance while it has positive significant effect on the long-term holding period returns.