Do investment banks create value for their clients? Empirical evidence from European acquisitions

Abstract

Europe provides an interesting setting to explore the role that investment banks play in acquisitions because it is composed of countries with different legal regimes – the shareholder-oriented common law regime in the UK/Ireland and the stakeholder-oriented civil law regime in Continental Europe. Since investment banks are hired to act in the interests of shareholders, and due to differences in disclosure requirements, market transparency, accounting standards, and ownership between the UK and Continental Europe, I argue that investment banks are relatively more important in UK-only acquisitions. My findings support this conjecture.