Factors that Impact Customer Loyalty in the Investment Banking Industry

The main goal of this article is to provide empirical evidence about some factors that impact customer loyalty in the investment banking industry sector. We find that only 45.11% of our sample repeated dealings with the same lead investment bank during the first seasoned equity offering (SEO). Our results suggest that customer loyalty has been declining in the securities firm industry during last decade. Also, we find that the number of days between offerings has a negative relationship with the probability of a firm to remain loyal to the same underwriter. We also find that firms with IPOs offered during 1999 and 2000 have a higher probability of underwriting loyalty during their first SEO; however, this relationship disappears during the second and third SEO. Similarly, we find that underwriter reputation has explanatory power over the probability of a firm's loyalty to the same underwriter only during the first SEO.