Using a dataset of institutional bids for IPOs, we study how relationships with lead underwriters impact institutional investors’ bidding strategy in the auctioned IPOs. Our paper finds that strong business ties lead to higher bid prices. The effect is more pronounced among IPO firms that receive less market attention, and is attenuated for IPOs certified by reputable intermediaries. We propose that rent-seeking incentives may be the potential mechanism for this relationship-based bidding. Our study highlights that the business connection between underwriters and institutional investors has effect on the IPO pricing.

中文翻译：

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你帮我挠背，我也帮你挠背：IPO拍卖中基于关系的竞价证据

利用机构对 IPO 投标的数据集，我们研究了与主承销商的关系如何影响机构投资者在拍卖的 IPO 中的投标策略。我们的论文发现，牢固的业务联系会导致更高的出价。对于受到市场关注较少的 IPO 公司来说，这种影响更为明显，而对于由信誉良好的中介机构认证的 IPO 公司来说，这种影响会减弱。我们认为寻租激励可能是这种基于关系的投标的潜在机制。我们的研究强调，承销商与机构投资者之间的业务联系对IPO定价有影响。