The underwriter: a European perspective

Extending back at least to McDonald and Fisher (1973), the importance of a prestigious underwriter has attracted the attention of researchers in trying to empirically measure reputation. Most of this literature, however, relies on measures tailored on the US case. Nonetheless, Europe has been attracting attention in comparative terms to the US. Moreover, the number of cross-countries studies in Europe yields to an increased demand for measures as proxy of the reputation of underwriters, even out of the corporate finance field. Along with the empirical literature, underwriters have come under the attention of the public debate. With the beginning of the financial crisis in 2007/2008, financial markets were put under severe pressure. In this context, there has been an increasing attention on the payments charged by underwriters on issuers for the services provided to them. A series of reports by regulatory bodies criticizes the surge in underwriting fees and highlight many issues, with particular focus on the degree of competition and the efficiency of the system of capital raising. In such framework, this work aims at investigating the role of underwriters in the European markets during security issuance events, from three different micro-perspectives: reputation, underwriting fees and performance of companies taken public by underwriters.