INVESTMENT BANKING
Author : Shruti Pawar
Roll No. 109
A Study on Role of Investment Banker in Acquisition of Human Capital.
Thomas J. Chemmanur et al. (2023) in this article studies “ Is the investment Bank ( IB) or the Investment banker” to know the importance and role of Investment Banking and IB while making acquisition deals that they address on with the help of some questions. In the study he has found that post experience of Investment Bankers plays an important role in decision making of acquisition operating performance. It is not the bank but the Investment Banker who advices the people with right deal. Also, if the more experienced Investment Banker switch to the new bank , acquirors are likely to move with them. In conclusion Skill and ability of Investment Banker is the most important factor while cracking or making deals in acquisition.
The performance of mutual funds affiliated with investment banks
(Grace) Qing Hao et al. (2023) in this study aims to objectively investigate the overall impact of superior information and conflicts of interest on the performance of mutual funds connected with investment banks. While having a relationship with an investment bank may lead to a fund’s pursuit of the bank’s interests at the detriment of the fund’s shareholders, it can also lead to a fund’s use of superior knowledge obtained through those contacts for the benefit of fund shareholders. This research reveals evidence that investment banks use their asset management division to facilitate client interactions. In this study they has found that investment banks utilise their asset management division to support customer interactions.
Influences on Customer Loyalty within the Investment Banking Sector
Dr. Juan M. Dempere et al. (2023)in this study found that customer loyalty in the investment banking industry is influenced by several factors, including the quality of the investment bank’s services, the bank’s reputation, and the relationship between the client and the investment bank. The study also found that the level of competition in the investment banking industry is an important factor in determining customer loyalty. When there are many investment banks competing for clients, customers are more likely to switch banks based on factors such as pricing, service quality, and reputation. The study highlights the importance of investment banks providing high-quality services and building strong relationships with their clients in order to promote customer loyalty. It also suggests that investment banks may benefit from strategies that differentiate themselves from competitors and focus on building long-term relationships with clients.
Effectiveness of Firm reputation in Investment Banking
Garbriel G. Ramirez et al. (2023)stats that in The research paper titled “Firm Reputation and Insider Trading: The Investment Banking Industry” studies the effectiveness of insider trading in Investment Banking. Insider trading, is a serious legal and ethical violation that can damage a firm’s reputation and lead to severe consequences, including fines, legal action, and loss of trust among clients and investors. Therefore, investment banking firms must prioritize maintaining a strong reputation by adhering to ethical and legal standards and implementing robust compliance and monitoring systems to prevent insider trading. By doing so, firms can protect their reputation and maintain the trust and confidence of their clients and investors. This research clearly says that, it appears that there is a strong relationship between a firm’s reputation and insider trading in the investment banking industry. Firms with strong reputations are less likely to engage in insider trading because they have a lot to lose if their reputation is tarnished.
Mergers and Acquisition’s influence on Investment Banking
Adam C. Kolasinski, (2008) et al. has studied conflicts arising from M&A relations, which have also concerned regulators but up to now have largely been ignored in the literature. While the results indicate that M&A affiliated analysts do indeed bias their reports in ways that benefit M&A clients and bankers, they do not necessarily indicate that M&A clients reward or actively solicit such behaviour. Investment banking analysts play an important role in providing investors with information and recommendations on companies. However, it is important for analysts to remain objective and unbiased in their analysis. The study highlights the need for investment banks to ensure that their analysts are not influenced by potential conflicts of interest, and for investors to be aware of these potential conflicts when evaluating investment recommendations.
Deregulation of Performance, Structure, and Registrations in Investment Banking
Robert J. Rogowski et al. (2023) in this study learned that It is debatable whether shelf registration will ultimately result in greater industry consolidation and a negative fall in regional businesses and capital formation. Over the past five years, regional businesses have shown they can make profitable ventures into niche industries. However, it was also noted that the top five or ten businesses were expanding their underwriting volume. If investment banking markets are reasonably “contestable,” the tendency towards higher concentration may not have any adverse economic impacts. It presumably started before Rule 415. It is very challenging to evaluate the due diligence and disclosure issue.
Conflicts of Interest in Investment Banks’ Stock Recommendations and Their Influencing Factors
Chung-Hua Shen et al. (2023) in this study explores the phenomena associated with conflicts of interest, particularly as they pertain to the brokerage and proprietary trading divisions of investment banks. According to the study, investment banks often make more favourable stock recommendations to clients than to non-clients. When investment banks have a financial stake in the client, such as when they are acting as an underwriter for the company’s securities or when they are providing other financial services, this bias is particularly clear. The study also discovered that a number of variables can affect how biased investment banks’ stock recommendations are. These variables include the client’s size and complexity, their connection with the investment bank, and the competition for clients among investment banks.
IPO Price Support in Investment Banking
Sturla Lyngnes Fjesme et al. (2023) in this article he investigates how the price support of IPOs affects the Investment banking with the help of some questions for which he studies the Oslo Stock Exchange (OSL). In this investigation he has found that the high commission investors are given an extra safety net not afforded to other investors they buy IPO shares. Investment banks often use IPO (Initial Public Offering) support from various professionals and service providers to help them with the process of taking a company public. He has also used some important terms like flipped allocation, realized profit, Holding Period Returns (HPR), etc. Overall, investment banks rely on a range of professionals and teams to provide IPO support and help companies successfully go public.
Links between investment banking and the financial system and the actual economy
Kushal Balluck et al. (2023) According to the them, there are a number of variables that affect customer loyalty in the investment banking sector, including the standard of the bank’s services, its standing, and the client-bank relationship. The study also discovered that a key element in affecting customer loyalty in the investment banking sector is the level of competition. Customers are more inclined to transfer banks when there are numerous investment banks vying for their business, depending on things like pricing, service level, and reputation. The report emphasises how crucial it is for investment banks to offer top-notch services and cultivate close bonds with their clients in order to encourage client loyalty. Additionally, it implies that investment banks may gain from adopting tactics that set them apart from rivals and focus on building long-term relationships with clients.
Knowledge-based Networks’ Dimensions of Proximity: The Cases of Investment Banking and Automobile Design
EIKE W. SCHAMP, et al. (2023) in this Cases of Investment Banking and Automobile Design investigates how proximity affects the development of knowledge-based networks in two distinct fields: investment banking and the creation of automobiles. According to the study, proximity has a significant impact on how knowledge-based networks are shaped in both industries. Geographic closeness was shown to be significant in the establishment of networks in investment banking because businesses tend to congregate in financial hubs like London and New York. But the research also discovered that cognitive closeness, or shared knowledge and experience, had a significant role in the development of networks. Geographic proximity was shown to be less significant in the design of automobiles because design teams were frequently dispersed across several places.
Conclusion
In conclusion, investment banking is a multifaceted field that involves a range of activities, including M&A, underwriting, trading, and asset management. Investment bankers play a crucial role in helping companies raise capital, execute strategic transactions, and manage their investments. Investment banks earn significant fees for their services, and the industry is highly competitive and fast-paced. The firms engaged in the investment banking industry are commonly classified into three categories: bulge bracket banks, middle-market banks, and boutique banks. Boutique banks are often further divided into regional boutiques and elite boutique banks.
References
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