Are relationship banking and market finance complements or substitutes? Some authors, stressing the incentive for firms to escape bank rent seeking, show that bank relationships weaken after companies IPO. On the contrary, another strand of literature suggests complementarity, as bank relationships bring positive news to financial markets. We study whether the likelihood of tapping financial markets depends on the intensity of bank relationships, a feature valued by external investors as providing an ex ante signal and initial additional monitoring. We find that the probability of issuing securities on financial markets is higher for firms entertaining stronger bank relationships.
|