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Who chooses whom? Syndication, skills and reputation
Author(s) -
Tykvová Tereza
Publication year - 2006
Publication title -
review of financial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 41
eISSN - 1873-5924
pISSN - 1058-3300
DOI - 10.1016/j.rfe.2005.10.001
Subject(s) - web syndication , reputation , temptation , moral hazard , incentive , core (optical fiber) , business , key (lock) , microeconomics , syndicate , economics , actuarial science , finance , psychology , venture capital , computer security , law , social psychology , political science , computer science , telecommunications
We develop a model focusing on the dynamic aspect of syndication, namely, the know‐how transfer between syndication partners and their ability to learn. The core of the analysis checks whether reputational concerns outweigh the temptation to renege on a given contract. Throughout the paper, we investigate two key topics. The first consists of the conditions under which investors syndicate their deals. The second focuses on who chooses whom. Sometimes, the syndication is impeded because the financier believes that his partner has strong incentives to either renege on a contract (hold‐up problem) or to shirk (moral hazard problem).