The gravity of syndication ties in international equity underwriting

Staff working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 14 April 2023

Staff Working Paper No. 1,021

By Luke Heath Milsom, Vladimír Pažitka, Isabelle Roland and Dariusz Wójcik 

We examine how cross-border syndication ties reduce information frictions and positively impact exports of equity underwriting services. Using a panel data set from 2000–15, we develop a measure of information flows based on ‘core syndication ties’ where the lead underwriter is in either the importing or exporting country. We find that new core syndication ties have a significant and positive effect on exports. This finding is supported by evidence from ‘peripheral syndication ties’, which are associated with smaller information flows, and an instrumental variable approach which focuses on plausibly exogenous supply-side shocks. Furthermore, the effect of new core syndication ties is stronger when information frictions between trading partners are more severe and for more information-sensitive transactions like IPOs.