Deregulation in investment banking: Industry concentration following rule 415

This paper examines activity in the investment banking industry around the passage of Rule 415 (the 'shelf registration regulation'). Our empirical results document that corporations that issued securities via shelf registrations chose to do so using significantly fewer and more prestigious underwriters per issue than corporations that issued securities prior to Rule 415. Although the trend toward fewer underwriters occurred for both shelf and non-shelf registrations, it is more pronounced for the shelf registered issues. Further, we show that stockholders of small, less prestigious underwriters experienced significantly larger stock price decreases than stockholders of larger, more prestigious underwriters during the period in which Rule 415 was passed.