Location of Repository

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

By Zhaohui Chen, Alan D. Morrison, William J. Wilhelm and William G. Shenkir Eminent Scholar

Abstract

We present a model that explains why investment bankers have struggled in recent years to manage conflicts of interest. The model captures two conflicting dimensions of reputation. On the one hand, banks can build a type reputation for technical competence by performing complex deals that may not serve their clients ’ interest; on the other hand, bankers can sustain a behavior reputation by refraining from doing so. Unproven banks favor type reputation over behavioral reputation; being ethical in our model is a luxury reserved for banks that have proven their abilities. The model also 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 behavior- and type- reputational concerns

Year: 2012
OAI identifier: oai:CiteSeerX.psu:10.1.1.362.8912
Provided by: CiteSeerX
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://citeseerx.ist.psu.edu/v... (external link)
  • http://www.mccombs.utexas.edu/... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.