Work

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

Year: 2014

Type: article

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.

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhu086

Authors: Zhaohui Chen, Alan D. Morrison, William J. Wilhelm

Institutions: University of Virginia, University of Oxford, Sun Yat-sen University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2129298636

FWCI: 5.667

Cites: 75

Cited by: 15

Related to: 10