One of the perks of working in an investment bank is - or rather was - a fairly casual approach to expenses. Almost everything is billable back to the employer, who directly or indirectly passes the expenses on to the clients.
Investors might take only a passing interest in such matters. But those who regularly invest in initial public offerings might note that listing expenditure is deducted from funds raised. In other words, shareholders ultimately end up paying for IPO costs, including any expense-account padding that might unfold during the execution and marketing phases.
To be fair to bankers, they incur many (and mostly) legitimate expenses while preparing and presenting IPOs. These include taxis and meals taken at the office when staying late; restaurants, flights and hotel bookings.
Travel policies vary for each firm, but financiers generally fly business class, stay in good hotels and are often ferried around in chauffeured cars. Exceptions are sometimes made in the case of short-haul flights or for junior staff, or when the head office decides to switch to cost-cutting mode - which can have an impact on morale, and usually doesn't last for too long.
But banks directly pass on to their corporate clients the main costs of an IPO, such as legal fees and road show expenses.
