Are Investment Banks Special Too? Evidence on Relationship-Specific Capital in Investment Bank Services

2012 ◽  
Author(s):  
Chitru S. Fernando ◽  
Anthony D. May ◽  
William L. Megginson
Keyword(s):  
Investment Banks ◽  
Investment Bank ◽  
Specific Capital

A Novel Integrated AHP-QFD Model for Investment Banks

2014 ◽  
Vol 548-549 ◽  
pp. 1959-1964 ◽  
Author(s):  
Hooman Mihanzadeh ◽  
Yulizar Widiatama ◽  
Marzieh Geramian Nik ◽  
Hamed Gholami ◽  
Zahra Akbardoost Laskoukalayeh
Keyword(s):  
Quality Function Deployment ◽  
Relative Weight ◽  
Design Tool ◽  
Decision Makers ◽  
Investment Banks ◽  
Investment Bank ◽  
Proposed Model ◽  
Hierarchy Process ◽  
Internal Relationships ◽  
Structured Questionnaire

This paper proposes an effective model to integrate shareholders’ requirements with regard to Bank’s investment categories in an effort to rank the best project portfolios in order of importance whereby they reap the benefits of their secured investments. This study attempts to utilize Quality Function Deployment (QFD) in an investment bank sector, a customer oriented design tool which starts with House of Quality (HOQ). In this manner, Analytical Hierarchy Process (AHP) approach was employed to fulfill the intended HOQs through measuring the relative importance of shareholders’ needs as well as finding the relative weight of each investment more precisely. For this purpose, a well-structured questionnaire initially should be developed to identify the selection-criteria “wants” and thereby analyzing the intensity of internal relationships through cooperation with the Bank’s Decision makers (BDMs). The results of project portfolio selection revealed that Project D has been nominated as the most potential investment category, followed by Project C, Project B, Project E and Project A. Hopefully, with implementation of the proposed model, investment banks will become more adaptive and competitive.

scholarly journals Why bidding firms do not hire financial advisors in mergers and acquisitions

2008 ◽  
Vol 5 (3) ◽  
pp. 316-323
Author(s):  
Wallace N. Davidson III ◽  
Shenghui Tong ◽  
Richard Proctor
Keyword(s):  
Mergers And Acquisitions ◽  
Transaction Costs ◽  
Information Asymmetry ◽  
Control Sample ◽  
The Other ◽  
Investment Banks ◽  
Financial Advisors ◽  
Primary Reason ◽  
Investment Bank ◽  
Acquiring Firms

In this paper, we examine why some bidders decide not to hire investment bank advisors in M&A transactions. We build a sample of 181 M&A transactions in which the acquiring firms do not hire investment bank advisors, and compare them with a control sample of 181 M&A transactions in which the acquiring firms hire investment bank advisors. We find that the transaction costs are the primary reason that investment banks are hired as advisors for bidders in M&A transactions. In addition, the information asymmetry and contracting costs are the other two reasons that bidders hire investment banks in M&A transactions.

scholarly journals Conflicts of Interest in the Stock Recommendations of Investment Banks and Their Determinants

2009 ◽  
Vol 44 (5) ◽  
pp. 1149-1171 ◽  
Author(s):  
Chung-Hua Shen ◽  
Hsiang-Lin Chih
Keyword(s):  
Conflicts Of Interest ◽  
Investment Banks ◽  
Investment Bank ◽  
Stock Recommendations ◽  
Short Run ◽  
Proprietary Trading

AbstractThis study explores the phenomena associated with conflicts of interest, particularly as they pertain to the brokerage and proprietary trading divisions of investment banks. This distinguishes it from past studies, which have researched conflicts of interest between underwriting and brokerage divisions. We examine whether or not an investment bank issues buy recommendations to the market and buys (sells) the same recommended stocks through its proprietary trading division before (after) recommendations, and if so, to what extent this goes on. We find that these conflicts of interest do exist and that these investment banks can profit from their recommendations in the short run.

Here in the Real World: The Performance of Alternative Beta

2020 ◽  
Vol 1 (1) ◽  
pp. 73-110
Author(s):  
Antti Suhonen ◽  
Matthias Lennkh
Keyword(s):  
Real World ◽  
Poor Performance ◽  
Risk Premia ◽  
Investment Banks ◽  
Time Varying ◽  
Investment Bank ◽  
The Poor ◽  
Sharpe Ratios ◽  
Alternative Beta ◽  
Aggregate Industry

We examine the realized performance of alternative beta strategies using a database of returns since 2008. Despite diversified portfolios of risk premia strategies offered by global investment banks achieving satisfactory Sharpe ratios of 0.80–1.07 during the decade to 2017, up to two thirds of the performance can be explained by exposure to traditional benchmarks. Furthermore, the outcomes are very sensitive to the estimated all-in fees incurred by investors. We find no evidence of positive alpha in the aggregate industry returns, and document a pattern of time-varying, asymmetric, and statistically significant betas to global equities and bonds. Our results suggest that the poor performance of the strategies in 2018–20 was not an aberration, but rather a continuation of patterns already present in earlier data. The findings are representative of the wider risk premia industry, as returns of managed alternative risk premia funds and those of diversified investment bank strategy portfolios appear closely aligned.

The Performance of Investment Bank-Affiliated Mutual Funds: Conflicts of Interest or Informational Advantage?

2012 ◽  
Vol 47 (3) ◽  
pp. 537-565 ◽  
Author(s):  
(Grace) Qing Hao ◽  
Xuemin (Sterling) Yan
Keyword(s):  
Mutual Funds ◽  
Initial Public Offering ◽  
Conflict Of Interest ◽  
Strong Evidence ◽  
Conflicts Of Interest ◽  
Investment Banks ◽  
Seasoned Equity Offering ◽  
Investment Bank ◽  
Public Offering ◽  
Informational Advantage

AbstractUsing a comprehensive sample of U.S. mutual funds from 1992 to 2004, we find strong evidence that investment bank-affiliated funds underperform unaffiliated funds. Consistent with the conflict of interest hypothesis, we find that affiliated funds hold disproportionately large amounts of stocks of their initial public offering and seasoned equity offering clients. Moreover, worse-performing clients are more likely to be held by affiliated funds. Our results are robust to alternative risk adjustments, portfolio weighting schemes, and regression methodologies. Overall, our findings are consistent with the idea that investment banks use affiliated funds to support underwriting business at the expense of fund shareholders.

scholarly journals Investment Bank Reputation and IPO Qualifications

2016 ◽  
Vol 12 (16) ◽  
pp. 54 ◽  
Author(s):  
Yubo Li
Keyword(s):  
Large Scale ◽  
High Growth ◽  
Low Risk ◽  
Investment Banks ◽  
Political Connections ◽  
Political Connection ◽  
Chinese Firms ◽  
Investment Bank ◽  
Screening Process ◽  
Regular Screening

This study examines the influence of investment bank’s reputation and political connection on the IPO qualification of Chinese firms. The results show that firms which are sponsored by prestigious investment banks are more likely to pass the regular screening process. Also, the investment bank’s political connections have no significant impact on the IPO qualification. Furthermore, we compared the various investment banks’ customer’s characteristic. Thus, the results show that the customers of prestigious investment banks have more large-scale, are high growth companies, and are more central enterprises. This indicates that high reputation investment banks tend to choose low risk and high growth prospective IPO companies in order to avoid damage to the reputation.

Investment Banks as Financial Advisors in Malaysian Mergers and Acquisitions

2017 ◽  
pp. 25-38
Author(s):  
Kien Cao Dinh ◽  
Thuy Nguyen Thu ◽  
Phuong Nguyen Minh
Keyword(s):  
Investment Banking ◽  
Investment Banks ◽  
Financial Advisors ◽  
Debt Ratio ◽  
Complex Environment ◽  
Publicly Traded ◽  
Investment Bank ◽  
Technology Sector ◽  
Financial Advisor ◽  
Target Firms

Our study examines the factors that affect the choice of hiring an investment bank as financial advisor in the merger and acquisition transactions of Malaysian acquirers. In the period from January 1995 to December 2012, approximately 38.6 percent of the Malaysian acquirers hire an investment bank when conducting M&A transactions. On the other hand, 23.8 percent of the target firms employ at least one investment bank as financial advisor when dealing with Malaysian bidders. Our findings reveal that both participants tend to hire an investment bank when the acquirer operates in the technology sector, the deal takes place in a crisis period and the value of the transaction is high. An acquirer who has a high debt ratio is less likely to employ an investment bank and a publicly traded target is more likely to employ an investment bank in their M&A transactions. Moreover, our results show that, in a complex environment, the hiring of an investment banking is not for the valuation purpose.

Development Financing under Constraints: A Decade of African Development Bank. By Ime Ekop Ebong. Bonn-Bad Godesberg: Verlag Neue Sesellschaft GmbH. 1974. 172 pp.(special Issue No. 8 of the Vierteljahresberichte.)

1975 ◽  
Vol 14 (1) ◽  
pp. 149-152
Author(s):  
M.A. Behzad
Keyword(s):  
Main Idea ◽  
Development Projects ◽  
Development Bank ◽  
Special Issue ◽  
Investment Bank ◽  
African Development ◽  
Know How ◽  
African Development Bank ◽  
Basic Infrastructure ◽  
The Given

Development Financing under Constraints, as the author himself puts it, is 'aimed to recapitulate the spirit in which the African Development Bank was founded, describe how it later functioned and why it functioned the way it did'. The study is an excellent attempt to highlight economic cooperation and integ¬ration and to discuss its rationale in view of the given constraints. The main idea behind the establishment of an institution, like the African Develop¬ment Bank (ADB), was necessarily an 'all-African Investment Bank' to promote development projects. The newly independent nations of Africa, lacking as they are in the basic infrastructure, are beset with difficulties in surviving as economically viable units. As such, the need for a pooling of resources and for technical know-how is particularly imperative

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