Social Structure Perspective on Conduct and Performance in the US Investment Banking Industry
Date Issued
2008
Date
2008
Author(s)
LO, YI-JU
Abstract
From the social structure perspective, an imperfectly competitive market can be described as a social network made up of clique-like subgroups of firms that define each other as potential competitors and who monitor each other’s actions. This thesis employs the social structure and social network theory to provide an alternative explanation of a firm’s collusive behavior, an area rarely discussed in the sociological literature. This thesis postulates that the clique and social structural attributes, the role diversity and the position inequality, influence the intensity of competition which in turn affects firms’ performance. This thesis hypothesizes that members coordinated in a stable clique structure are more likely to show less intense competition with higher role diversity and less position inequality. This thesis uses the U.S.A. investment banking industry for its empirical setting. The samples are drawn from those investment banks that conducted underwriting businesses, serving as book runners and joint book runners for new issues of common shares in a syndicate from 1997 till 2006. The reciprocal relationship between two book-runner banks participating in each other’s syndicate construct the social network structure – cliques, which are then used to test the hypotheses of this thesis.
Subjects
Collusion
Social Structure
Clique
Role Diversity
Position Inequality
Type
thesis
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