Business models, ownership structure and corporate governance in investment banking industry: theory and evidences

This study is based on the premise that it is chiefly larger enterprises that require investment banking services, due to their complexity, the difficult scenarios in which they must operate and the crucial nature of the strategic challenges they must face. Accordingly, in this paper we have subjected to empirical verification the hypothesis that the type of ownership structures of larger enterprises, on the one hand, and the quality of their governance on the other are correlated with the demand for specific investment banking services. In this sense, an original feature of this reseach is the attempt we have made to build a proxy for the propensity of enterprises to request investment banking services, with reference to an extended definition of investment banking. Next, we sought to verify whether the services examined foster the obtainment of better performance results. Given the relevance of the needs met by such services in the context of the management of major business enterprises, we wanted to ascertain whether companies characterised by greater probability of recourse to investment banking services showed better income performance. The empirical analysis performed on a sample of 150 enterprises showed that the analysis model based on the adoption of the investment banking propensity indicator is significant with reference to the ownership and governance variables. More efficient ownership and governance configurations are associated with increased propensity for investment banking. However, no conclusive and univocal conclusions can be drawn with regard to the relationship between investment banking propensity and performance. In this regard, it is possible to assume that the results derived from the performance of investment banking operations only become evident in the medium term. In any case, this paper constitutes a first step towards the systematisation of a theory of investment banking, interpreted in a wider sense than that is most commonly employed and independently of the specific business models or legal forms of financial intermediaries that perform or have performed such activities.