학술대회
일정
Heated Negotiation within the Syndicate and IPOs
작성자 : 관리자
조회수 : 334
게시일 :
2011-10-12
This paper examines the determinants of the heated negotiation within the syndicate––i) between the lead underwriter and co-managers and ii) among co-managers––and how it affects IPOs. We find that the heated negotiation is associated with less compensation for co-managers. Our results suggest thatthe inferior co-managers’ bargaining position and superior lead underwriter bargaining power, together increasing a chance of an unfair initial profit sharing, lead to the heated negotiation. In relation to negotiation heatedness, we test key underwriter services such as information production, market making, and all-star analyst coveragebut find no strong support for the significant relationship after controlling for endogeneity. Overall, evidence indicates that underwriters––lead underwriter and co-managers––do not negotiate their shares of compensation based on their pre-commitment and actual provision of key underwriter services. Rather, it appears that heated negotiation materializes as co-managers’ resistance against the lead underwriter’s initial unfair profit sharing design given the heated negotiation is associated with less compensation for co-managers.