Scaling the Hierarchy: How and Why Investment Banks Compete for Syndicate Co-management Appointments

We show that relatively optimistic research and even the mere provision of research coverage for the issuer (regardless of its direction) attract co-management appointments for securities offerings. Co-management appointments are valuable because they help banks establish relationships with issuers. These relationships, in turn, substantially increase the banks' chances of winning more lucrative lead-management mandates in the future. This is true even in the presence of historically exclusive banking relationships.