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A new measure for heated negotiation in the IPO syndicate
- Authors
- Jeon, Jin Q.; Lee, Cheolwoo
- Issue Date
- Jul-2015
- Publisher
- ELSEVIER SCIENCE INC
- Keywords
- Heated negotiation; Syndicate; IPO; Underwriter; Compensation
- Citation
- NORTH AMERICAN JOURNAL OF ECONOMICS AND FINANCE, v.33, pp 278 - 304
- Pages
- 27
- Indexed
- SSCI
SCOPUS
- Journal Title
- NORTH AMERICAN JOURNAL OF ECONOMICS AND FINANCE
- Volume
- 33
- Start Page
- 278
- End Page
- 304
- ISSN
- 1062-9408
1879-0860
- 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. (C) 2015 Elsevier Inc. All rights reserved.
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Related Researcher
- Jeon, Jin Q
- Dongguk Business School (Department of Business Administration)