A new measure for heated negotiation in the IPO syndicate

Jin Q. Jeon and Cheolwoo Lee

The North American Journal of Economics and Finance, 2015, vol. 33, issue C, 278-304

Abstract: This paper develops novel measures for heated negotiation within the IPO syndicate––(i) between the lead underwriter and co-managers and (ii) among co-managers. We find that the inferior bargaining position for the lead underwriter and superior bargaining power for co-managers with initial low compensation for co-managers lead to heated negotiation. Our results indicate that underwriters 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 resist against the lead underwriter's initial unfair profit sharing design.

Keywords: Heated negotiation; Syndicate; IPO; Underwriter; Compensation (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:33:y:2015:i:c:p:278-304

DOI: 10.1016/j.najef.2015.06.002

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