We examine whether investment bank-client relationships create valuable relationship-specific capital, using stock market evidence from the period surrounding the collapse of Lehman Brothers. Specifically, we study the impact of the Lehman collapse on firms that employed Lehman for (1)...

The question of whether optimal provision of these services comes mainly from established relationships between banks and client firms or can result from arms'‐length market transactions has been the topic of considerable recent debate. This discussion has paralleled the debate in the...