Replication data for: Investment Banks as Corporate Monitors in the Early Twentieth Century United States

We study the effect of financial relationships on firms' investment decisions and access to external finance. In the early twentieth century, securities underwriters commonly held directorships with American corporations. Section 10 of the Clayton Antitrust Act prohibited bankers from serving on the boards of railroads for which they underwrote securities. We find that following the implementation of Section 10, railroads with strong preexisting relationships with underwriters saw declines in their investment rates, valuations, and leverage, and increases in their costs of external funds. Reassuringly, we do not observe similar effects among industrials and utilities, which were not subject to Section 10. Our results are consistent with underwriters on corporate boards acting as delegated monitors, and highlight the potential for regulations intended to address conflicts of interest to disrupt valuable information flows.

本研究考察了金融关联对企业投资决策与外部融资可得性的影响。二十世纪早期，证券承销商（securities underwriters）通常会在美国企业中兼任董事职务。《克莱顿反托拉斯法》（Clayton Antitrust Act）第10条明确禁止银行家在其负责证券承销的铁路公司董事会任职。研究发现，在该条款实施后，与承销商存在紧密既往关联的铁路企业，其投资率、估值与杠杆率均出现下滑，而外部融资成本则有所上升。值得注意的是，未受第10条法案约束的工业与公用事业企业并未观测到类似效应。本研究结果与"企业董事会中的承销商承担委托监督职责"这一论断相符，同时也凸显了旨在解决利益冲突的监管政策，有可能破坏宝贵的信息流动渠道。