Role Of Investment Banks Research Articles

An Analysis of the Development of Investment Banks' IPO Business under the Registered System

Under the reformed registration system, the role of investment banks in the Initial Public Offering (IPO) business has evolved significantly from the approval system. As crucial "gatekeepers" of the capital market, these banks now bear the responsibility of thoroughly examining issuance application materials for truthfulness, accuracy, and completeness. While the IPO business promises a prosperous future for investment banks, it also presents considerable challenges. Some banks face issues such as insufficient adherence to prudent examination requirements, lax establishment or implementation of internal control systems, and the need for improved information management. To enhance their sponsorship business, it is recommended that investment banks optimize talent training, internal management control, risk management, and intelligent information system construction. Cultivating professional sponsorship talents with comprehensive skills, reinforcing ethical standards, and conducting thorough reviews of IPO companies are crucial. Furthermore, optimizing the management system, establishing effective communication mechanisms, and enhancing risk management capabilities are essential steps. Leveraging advancements in computer technology, the construction of a secure and reliable intelligent information system is advised. As the reform progresses, investment banks should bolster international exchanges, cooperation, and professional competitiveness to evolve into reputable international brand banks.

Research on the Role of Investment Banks in the China’s IPO Market

Investment banks are essential players in today's dynamic capital market, serving as intermediaries that facilitate a wide range of financial activities crucial for economic growth and development. These activities encompass venture capital, project financing, mergers and acquisitions, corporate restructuring, securities issuance, and investment analysis. Investment banks must establish robust developmental frameworks and adapt to changing industry dynamics to remain effective and resilient in the face of evolving economic and financial landscapes. This research explores the role played by investment banks in the Chinese Initial Public Offering (IPO) market while considering the nation's historical context. China's financial evolution has been marked by unique historical events and economic reforms, which have significantly influenced its IPO market and the involvement of investment banks. Examining the interplay between these factors is vital for understanding the broader dynamics of the global financial system. It provides valuable insights into the strategies and adaptations required for investment banks to thrive in this complex environment. This study aims to contribute to the existing body of knowledge and inform industry stakeholders, policymakers, and investors about the intricacies of investment banking in China's IPO market.

A Study and Analysis of Investment Banking and Regional Development Among European Economy

Investment banks are financial intermediaries that specialize in the sale of securities and the issuance and underwriting of new shares to raise capital financing. Investment banking is a special segment of banking that assists individuals or organizations to raise capital in the main market. In the tea market, new securities are issued and act on behalf of customers, thus playing an important role in the secondary market. Investment banks undertake new debt or equity securities for all types of businesses, support the sale of securities, and facilitate mergers and acquisitions by institutional and individual investors. Investment banking organizations act as intermediaries between investors and capital markets. Investment banks are becoming important in European capital markets due to many factors including the perception of investment banks among investors and the various other functions implemented by investment banks. The research paper aims to show the role of investment banks in the current scenario. This study is descriptive in nature and uses auxiliary data. The study reveals the growth, development, function and role of investment banking in the European economy. The main objective of this investigation is to clarify how investment banks play a role in increasing a country’s resources and economic growth. It analyzes the various functions performed by investment banks. Investment banks connect the people who sell securities with their investors. Investment banks add liquidity to the market. Investment banks promote savings and investment and eliminate capital shortages. Mobilize small, scattered savings in the community so you can invest in productive businesses. He concluded that the role of investment banks in economic development is important.

The role of investment banking in economic development of India: Past, Present and Future

The role of investment banking in economic development of India: Past, Present and Future

Freeport-McMoRan: Financing an Acquisition

Freeport-McMoRan's acquisition of Phelps Dodge created the world's largest publicly traded copper company. JPMorgan and Merrill Lynch advised the acquirer and arranged $17.5 billion in debt financing and $1.5 billion in credit facilities. In addition, these two firms underwrote $5 billion in equity capital through simultaneous offerings of Freeport-McMoRan common shares and mandatory convertible preferred shares. These financings created an optimal capital structure for the company that resulted in stronger credit ratings. The activities of the equity capital markets and sales groups at the underwriting firms are explored and the structure and benefits of mandatory convertible preferred shares is explained.To understand the role of investment banks in advising a large corporation regarding an acquisition and related financings in the capital markets. As part of this, the activities of an investment banking firm's equity capital markets group and their underwriting risks are analyzed. Finally, the structure of a mandatory convertible security is reviewed in terms of benefits to both issuers and investors.

The role of investment banks on the impact of firm performance in mergers and acquisitions: evidence from the Asia-Pacific market

This study uses a comprehensive sample of 5271 bidders during the period of 1995–2011 to examine the role of financial advisors on the outcomes of mergers and acquisitions in the Asia Pacific market. The results indicate that bidders take more time to complete deals when hiring tier-3 advisors. In addition, the empirical evidence indicates that bidders obtain higher announcement returns when hiring low reputation financial advisors. The results are robust when controlling for year effects, country effects and self-selection bias. In addition, the regression analysis also reveals that bidders obtain lower post-announcement returns when hiring tier-1 advisors in domestic deals. Thus, the empirical findings illustrate the importance of the quality of financial advisors on firm performance in mergers and acquisitions in the Asia Pacific market.

The Role of Investment Banking in M&A Operations: Empiric Pre and Post Lehman Evidence

The role of investment banks in M&A operations is analyzed on the basis of empiric evidence. In particular, to point out the variations in the impact of the certification effect which can be ascribed to investment banks, the relationship between the value created for the shareholders in companies involved in special underwriting operations and the reputation of the banks appointed to act as advisors is examined. The analysis, which uses an original measuring system in order to assess and classify the reputation variable, focuses on transactions that have taken place between listed companies in two time frames, symmetrical to each other, specifically pre and post the Lehman Brothers bankruptcy. The total sample is composed of 229 transactions, divided into 161 and 68 observations, respectively pre and post Lehman. The result is that in the post Lehman period, unlike the preceding time frame, for which no significant empiric evidence is found, the wealth of the shareholders (of both targets and acquirers) is significantly influenced by the reputation of the investment banks which have acted as advisors. This indicates that, subsequent to the shock of the Lehman Brothers collapse, the certifying effect of the investment banks takes on an important role in the shareholders' choice.

Comparative Advantage, Industry Specialization, and the Role of Investment Banks in M&As

This paper examines the value added role of industry specialist advisors in M&A transactions using the Additive Revealed Comparative Advantage (ARCA) index to proxy advisors’ relative level of industry specialization prior to deal announcement. After controlling for endogeneity, we find that industry specialist advisors are able to generate higher returns for their acquirer clients, with the value creation resulting primarily from the selection of more synergistic targets and negotiating to pay a lower takeover premium. Additionally, while our results suggest specialist advisors are less likely to complete a deal, they are able to complete tender offers in less time. The findings are consistent with the traditional perception of the superiority of industry specialists and show that specialization is beneficial to the M&A advisory market. We find that specialist advisor charge lower fees, suggesting that in addition to superior advice, they are able to pass some cost efficiencies onto their bidder clients.

The End of Investment Bank Capitalism? Financial Jobs and Power in the Securities Industry

Media often portray investment bankers as the culprits of the global financial crisis, while mainstream scholarly accounts blame government failures and global trade and financial imbalances. This paper investigates the role of investment banks in the global financial crisis and the US economy, by focusing on employment patterns and power relations in the financial sector between 1978 and 2008. It demonstrates that investment banking plays a central part in the securities industry, which has been by far the most expansive segment of the US financial sector, and a significant contributor to growing income inequality. The power of investment banking has risen over the last 30 years in the conditions of growing demand for investment services, technological changes, deregulation and globalization. Investment banks were at the heart of the shadow banking system, inventing many of the products used by it and often disguising its operation. With leading US investment banks converted into bank holding companies, and the threat of re-regulation, the future of investment banking is uncertain. One area of uncertainty is their relationship with Sovereign Wealth Funds, which involves both opportunities and challenges. The paper finishes with a call for more research on investment banking as an industry, which is a key to understanding the dynamics of contemporary world economy, including insights into the trajectory of commodity and carbon markets, as well as the shifting landscape of financial centres.

Investment Banks in Dual Roles: Acquirer M&A Advisors as Underwriters

We analyze the dual role of investment banks that provide advice to acquiring firms and act as underwriters on the securities issued to finance the acquisition. We find that a significant fraction (56 percent) of acquirers that issue public securities to finance their acquisitions also use their advisor as the underwriter on the acquisition related security issue. We find that this dual role of the acquirer advisor is associated with lower acquirer announcement returns, higher target announcement returns, and higher acquisition premiums. These results are consistent with the existence of conflict of interest between the acquiring firm shareholders and their dual role advisor. We also find that, for larger transactions, which have the most potential for conflict of interest because of the larger fees involved, the relation between acquirer announcement returns and the dual advisor-underwriter role played by the acquirer’s investment bank is more negative. Acquisitions that are advised by dual role investment banks are more likely to be eventually divested. For larger transactions, the relation between the likelihood of divestiture and the dual advisor-underwriter role played by the acquirer’s investment bank is more positive. However, such a dual role of the acquirer advisor does not lead to lower underwriting fees or issue costs. Acquisitions involving dual role investment banks are completed faster, suggesting a potential motivation for using investment banks in such dual advisor-underwriter roles. Our results are robust to controlling for the selection of firms that finance their acquisitions with a security issue and the endogeneity of underwriter selection.

The role of investment banks in M&A transactions: Fees and services

We examine the pricing and performance of advisers in M&A transactions. We determine adviser quality on the basis of a contemporaneous market share measure and show that high quality advisers receive higher M&A advisory fees. High quality advisers also complete deals faster, but their superiority is not reflected in increasing the likelihood of deal completion or delivering greater abnormal equity returns to their clients. It is well known that stock bids are received more negatively than cash bids, so we further partition the sample of acquirers by consideration type and examine the abnormal returns of each partition. We find that high quality investment banks are able to differentiate themselves by delivering greater abnormal returns to their acquirer clients in deals involving stock.

Coexistence and Specialization of Investment Banks and Commercial Banks: Evidence from Corporate Bond Underwriting

Prior research documents that commercial banks underwrite bonds with lower net yields than investment banks and concludes that commercial banks are superior underwriters. However, such a conclusion is inconsistent with the observed prominent role of investment banks in underwriting. This paper demonstrates that the findings of prior research are driven by the empirical methodology employed. This methodology does not permit individual underwriters to possess different comparative advantages and to serve different clienteles. When such factors are included, the results are markedly different from those of prior studies. On average, both types of underwriters serve their bond-issuing clients better than the other would and obtain significantly higher bond prices for them. The findings demonstrate that firms select rationally between underwriter types, seeking to minimize the total costs of bond issuance.

L'évolution des relations entre émetteurs, intermédiaires et investisseurs

The evolution of the relationship between issuers, intermediaries and investors Changes are taking place in the tripartite relationship between issuers (and vendors), intermediaries and investors. As a result of automation and greater sophistication among issuers and investors, the role of investment banks in lead managing offerings is being de-mystified and de-mythologised. However, this is unlikely to lead to full scale disintermediation but rather to a more sharply defined role for intermediaries where their added value is clear and indisputable. There will always be a place for judgement, long experience in the markets and in-depth knowledge of the needs and desires of the ultimate buyers of securities.

Corporate Financial Management.

I. FOUNDATIONS. 1. Introduction and Overview. 2. The Financial Environment: Concepts and Principles. 3. Accounting, Cash Flows, and Taxes. II. VALUE AND CAPITAL BUDGETING. 4. The Time Value of Money. 5. Valuing Bonds and Stocks. 6. Business Investment Rules. 7. Capital Budgeting Cash Flows. 8. Capital Budgeting in Practice. III. RISK AND RETURN. 9. Risk and Return: Stocks. 10. Risk and Return: Asset Pricing Models. 11. Risk, Return, and Capital Budgeting. 12. Risk, Return, and Contingent Outcomes. 13. Risk, Return, and Agency Theory. IV. CAPITAL STRUCTURE AND DIVIDEND POLICY. 14. Capital Market Efficiency: Explanation & Implications. 15. Capital Structure Policy. 16. Managing Capital Structure. 17. Dividend Policy. V. LONG-TERM FINANCING. 18. Issuing Securities and the Role of Investment Banking. 19. Long-Term Debt. 20. Leasing and Other Asset-Based Financing. 21. Derivatives and Hedging. VI. WORKING CAPITAL MANAGEMENT. 22. Cash and Working Capital Management. 23. Accounts Receivable and Inventory. 24. Financial Planning. VII. SPECIAL TOPICS. 25. Mergers and Acquisitions. 26. Financial Distress. 27. International Corporate Finance.

The Role of Investment Banks in Acquisitions

We compare acquisitions completed with and without investment bank advice over the 1981 to 1992 period. We find that the choice to use an investment bank depends on the complexity of the transaction, the type of transaction (takeovers versus acquisitions of assets), the acquiror’s prior acquisition experience, and the degree of diversification of the target firm. Although acquisition announcement returns are lower for firms using investment banks, this difference can be explained by differences in transaction characteristics. These results suggest that transaction costs are the main determinant of investment banking choice, followed by contracting costs and asymmetric information costs.

Costs of Financial Distress, Delayed Calls of Convertible Bonds, and the Role of Investment Banks

Costs of Financial Distress, Delayed Calls of Convertible Bonds, and the Role of Investment Banks

Where the Money Comes From: A Brief Account of the Role of Investment Banking in American History and its Place in the Economy Today. By Fred G. Clark and Richard Stanton Rimanoczy. Princeton, New Jersey, D. Van Nostrand Company, Inc., 1961. Pp. 61. $4.95.

Where the Money Comes From: A Brief Account of the Role of Investment Banking in American History and its Place in the Economy Today. By Fred G. Clark and Richard Stanton Rimanoczy. Princeton, New Jersey, D. Van Nostrand Company, Inc., 1961. Pp. 61. $4.95.