The hierarchical paradigm holds major mergers responsible for triggering starbursts and for the transport of gas to nuclear regions leading to AGN activity, with AGN feedback potentially heating and clearing away remaining gas from the host and terminating star formation. Incidentally, major mergers also lead to the formation of spheroidal galaxies, which will need a Gyr or more to settle onto the red sequence of non-star-forming, passively evolving galaxies. This picture is broadly consistent with the observations of AGN host galaxies.
Observations of a relationship between quiescent black-hole masses and the velocity dispersion of the hosting galaxy bulge (Ferrarese & Merritt 2000; Gebhardt et al. 2000) have suggested a co-evolution of galaxies and AGN. This relation can be further developed into a relation between MBH and stellar mass of the bulge. However, recently, Treu, Malkan & Blandford (2004) found the MBH- relation at z = 0.37 offset from the one at z = 0. If this result is confirmed, it implies that AGN were active and black holes have grown before the stellar bulges reached their final mass. On a currently more speculative side, high-resolution VLA observation made by Walter et al. (2004) support this view, claiming that the host galaxy of the highest-redshift QSO known, SDSS J1148+5251 at z = 6.42, consists mostly of molecular gas, with very little room left for stellar mass, effectively ruling out the presence of a 1012 Msol stellar bulge required by the local MBH- relation.