Alan D. Morrison and William J. Wilhelm Jr.
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780199296576
- eISBN:
- 9780191712036
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199296576.003.0003
- Subject:
- Economics and Finance, Financial Economics
This chapter applies the property rights theory of Chapter 2 to the investment bank. A critical activity in capitalist economies is the allocation of new resources to new ventures. But this activity ...
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This chapter applies the property rights theory of Chapter 2 to the investment bank. A critical activity in capitalist economies is the allocation of new resources to new ventures. But this activity rests upon dispersed information over which it is impossible to enforce formal property rights. Hence, it is very hard to provide the right incentives to ensure that this information is created, and that it is communicated to investors. It is argued that the primary role of the investment bank is to create and to enforce extra-legal property rights over this price-relevant information. Investment banks manage an ‘information marketplace’, a close network of institutions that agree to relational contracts over information production and exchange. The members of an information marketplace are described and their management is explained. The investment bank relies upon its reputation to enforce these contracts. Since by their nature relational contracts cannot be formally documented, the chapter notes the central importance to investment banks of tacit knowledge.Less
This chapter applies the property rights theory of Chapter 2 to the investment bank. A critical activity in capitalist economies is the allocation of new resources to new ventures. But this activity rests upon dispersed information over which it is impossible to enforce formal property rights. Hence, it is very hard to provide the right incentives to ensure that this information is created, and that it is communicated to investors. It is argued that the primary role of the investment bank is to create and to enforce extra-legal property rights over this price-relevant information. Investment banks manage an ‘information marketplace’, a close network of institutions that agree to relational contracts over information production and exchange. The members of an information marketplace are described and their management is explained. The investment bank relies upon its reputation to enforce these contracts. Since by their nature relational contracts cannot be formally documented, the chapter notes the central importance to investment banks of tacit knowledge.
Alan D. Morrison and William J. Wilhelm Jr.
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780199296576
- eISBN:
- 9780191712036
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199296576.003.0001
- Subject:
- Economics and Finance, Financial Economics
This introductory chapter discusses the types of securities that firms issue, and describes the investment banks that support their issue. The major business lines of the modern investment bank are ...
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This introductory chapter discusses the types of securities that firms issue, and describes the investment banks that support their issue. The major business lines of the modern investment bank are investment banking, trading, asset management, and advisory work: each of these is explained and the structure of the modern investment banking industry is discussed. Data are presented showing the current size of the securities markets and the recent evolution of these markets. The relative importance of the various activities of the modern investment bank is analysed, and market trends in the organization and scale of the leading investment banks are presented.Less
This introductory chapter discusses the types of securities that firms issue, and describes the investment banks that support their issue. The major business lines of the modern investment bank are investment banking, trading, asset management, and advisory work: each of these is explained and the structure of the modern investment banking industry is discussed. Data are presented showing the current size of the securities markets and the recent evolution of these markets. The relative importance of the various activities of the modern investment bank is analysed, and market trends in the organization and scale of the leading investment banks are presented.
Alan D. Morrison and William J. Wilhelm, Jr.
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780199296576
- eISBN:
- 9780191712036
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199296576.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book provides an economic rationale for the dominant role of investment banks in the capital markets, and uses it to explain both the historical evolution of and recent changes to the investment ...
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This book provides an economic rationale for the dominant role of investment banks in the capital markets, and uses it to explain both the historical evolution of and recent changes to the investment banking industry. The book points to the importance of well-defined property rights and properly-functioning property rights institutions in supporting the devolved decision making that drives capitalist economies. A critical decision in capitalist economies is the investment decision that allocates resources to new ventures. But this decision relies upon price-relevant information over which it is impossible to establish property rights; as a result, it is very hard to coordinate the exchange of this information. The book argues that investment banks help to resolve this problem by managing ‘information marketplaces’ within which extra-legal institutions support the production and dissemination of information that is important to investors. Reputations and relationships are more important in fulfilling this role than financial capital. The theory is substantiated with reference to the industry's evolution during the last three centuries. It shows how investment banking networks were formed, and identifies the informal contracts they supported. This historical development points to tensions between banks and the regulatory impulses of the State, thus providing some explanation for periodic large-scale State intervention in the operation of capital markets. The book's theory also provides a technological explanation for the massive restructuring of the capital markets in recent decades, which can be used to think about the likely future direction of the investment banking industry.Less
This book provides an economic rationale for the dominant role of investment banks in the capital markets, and uses it to explain both the historical evolution of and recent changes to the investment banking industry. The book points to the importance of well-defined property rights and properly-functioning property rights institutions in supporting the devolved decision making that drives capitalist economies. A critical decision in capitalist economies is the investment decision that allocates resources to new ventures. But this decision relies upon price-relevant information over which it is impossible to establish property rights; as a result, it is very hard to coordinate the exchange of this information. The book argues that investment banks help to resolve this problem by managing ‘information marketplaces’ within which extra-legal institutions support the production and dissemination of information that is important to investors. Reputations and relationships are more important in fulfilling this role than financial capital. The theory is substantiated with reference to the industry's evolution during the last three centuries. It shows how investment banking networks were formed, and identifies the informal contracts they supported. This historical development points to tensions between banks and the regulatory impulses of the State, thus providing some explanation for periodic large-scale State intervention in the operation of capital markets. The book's theory also provides a technological explanation for the massive restructuring of the capital markets in recent decades, which can be used to think about the likely future direction of the investment banking industry.
Roy C. Smith and Ingo Walter
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780195171679
- eISBN:
- 9780199783618
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195171675.003.0008
- Subject:
- Economics and Finance, Microeconomics
Financial intermediaries — firms that function as the “middlemen of finance” — monitor and influence the way companies are governed in a market economy. Prior to 1933, most large, money-center banks ...
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Financial intermediaries — firms that function as the “middlemen of finance” — monitor and influence the way companies are governed in a market economy. Prior to 1933, most large, money-center banks had subsidiaries that acted as intermediaries in wholesale finance; they acted as underwriters of new issues for corporations and (foreign) governments and engaged in brokerage and trading generally with large, wholesale market players. After 1933, the U.S. securities industry emerged as distinctly separate from banking. Banks were to act in the financial system as deposit takers and commercial lenders, and investment banks were to act as advisers, underwriters, and traders. This functional division remained that way until the 1990s.Less
Financial intermediaries — firms that function as the “middlemen of finance” — monitor and influence the way companies are governed in a market economy. Prior to 1933, most large, money-center banks had subsidiaries that acted as intermediaries in wholesale finance; they acted as underwriters of new issues for corporations and (foreign) governments and engaged in brokerage and trading generally with large, wholesale market players. After 1933, the U.S. securities industry emerged as distinctly separate from banking. Banks were to act in the financial system as deposit takers and commercial lenders, and investment banks were to act as advisers, underwriters, and traders. This functional division remained that way until the 1990s.
Alan D. Morrison and William J. Wilhelm Jr.
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780199296576
- eISBN:
- 9780191712036
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199296576.003.0010
- Subject:
- Economics and Finance, Financial Economics
This chapter uses the theory developed in the previous chapter to comment upon recent developments in the investment banking world, and to speculate about the likely future development of the market. ...
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This chapter uses the theory developed in the previous chapter to comment upon recent developments in the investment banking world, and to speculate about the likely future development of the market. The major investment banks are getting bigger and bigger. Their work is increasingly codified and, as a result of legislation like the Sarbanes Oxley Act, is increasingly regulated. It is argued that these trends have encouraged the development of smaller boutique investment banks, and the role of these firms in M&A advisory work, private equity investment, and hedge fund management is discussed. Future developments will reflect the tensions between the technological advantages that accrue to large, complex banking organizations, and the relative strengths that small, focused boutique operations have in tacit human capital businesses.Less
This chapter uses the theory developed in the previous chapter to comment upon recent developments in the investment banking world, and to speculate about the likely future development of the market. The major investment banks are getting bigger and bigger. Their work is increasingly codified and, as a result of legislation like the Sarbanes Oxley Act, is increasingly regulated. It is argued that these trends have encouraged the development of smaller boutique investment banks, and the role of these firms in M&A advisory work, private equity investment, and hedge fund management is discussed. Future developments will reflect the tensions between the technological advantages that accrue to large, complex banking organizations, and the relative strengths that small, focused boutique operations have in tacit human capital businesses.
Alan D. Morrison and William J. Wilhelm Jr.
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780199296576
- eISBN:
- 9780191712036
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199296576.003.0004
- Subject:
- Economics and Finance, Financial Economics
This chapter traces the origins of the modern investment bank. It argues that the English Revolution of 1688 created the strong formal property rights upon which large-scale trade rests. ...
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This chapter traces the origins of the modern investment bank. It argues that the English Revolution of 1688 created the strong formal property rights upon which large-scale trade rests. Nevertheless, mercantile law had not advanced to a stage where it could support complex trade, and trans-Atlantic communication was so slow that participants in the Atlantic trade required so much autonomy that formal contracting over their actions was a technological impossibility. Hence the Atlantic trade of the 18th century rested upon reputationally intermediated relational contracts of the type that characterize the modern investment bank. The chapter surveys evidence in support of this hypothesis and discusses the 18th-century development of the stock market in the UK.Less
This chapter traces the origins of the modern investment bank. It argues that the English Revolution of 1688 created the strong formal property rights upon which large-scale trade rests. Nevertheless, mercantile law had not advanced to a stage where it could support complex trade, and trans-Atlantic communication was so slow that participants in the Atlantic trade required so much autonomy that formal contracting over their actions was a technological impossibility. Hence the Atlantic trade of the 18th century rested upon reputationally intermediated relational contracts of the type that characterize the modern investment bank. The chapter surveys evidence in support of this hypothesis and discusses the 18th-century development of the stock market in the UK.
Charles R. Geisst
- Published in print:
- 1999
- Published Online:
- November 2003
- ISBN:
- 9780195130867
- eISBN:
- 9780199871155
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195130863.003.0008
- Subject:
- Economics and Finance, Economic History, Financial Economics
The reaction from Washington to Wall Street woes. Hoover calls Senate investigation into market practices, Roosevelt wins White House, short selling depresses market, F. Pecora becomes lead counsel ...
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The reaction from Washington to Wall Street woes. Hoover calls Senate investigation into market practices, Roosevelt wins White House, short selling depresses market, F. Pecora becomes lead counsel for hearings. Wall Streeters give testimony. Congress passes banking and securities acts in 1933. Stock exchanges regulated in 1934 and SEC is created.Less
The reaction from Washington to Wall Street woes. Hoover calls Senate investigation into market practices, Roosevelt wins White House, short selling depresses market, F. Pecora becomes lead counsel for hearings. Wall Streeters give testimony. Congress passes banking and securities acts in 1933. Stock exchanges regulated in 1934 and SEC is created.
Charles R. Geisst
- Published in print:
- 1999
- Published Online:
- November 2003
- ISBN:
- 9780195130867
- eISBN:
- 9780199871155
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195130863.003.0003
- Subject:
- Economics and Finance, Economic History, Financial Economics
Railroad financing through the Civil War, 1840–70. The attraction of railroads as the first major infrastructure investment; scandals involving financiers; major panic following dissolution of Bank ...
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Railroad financing through the Civil War, 1840–70. The attraction of railroads as the first major infrastructure investment; scandals involving financiers; major panic following dissolution of Bank of the U.S.; development of early investment banks; scandals during Civil War including those surrounding U. S. Grant, Jay Gould, and NYSE; raising bonds during Civil War.Less
Railroad financing through the Civil War, 1840–70. The attraction of railroads as the first major infrastructure investment; scandals involving financiers; major panic following dissolution of Bank of the U.S.; development of early investment banks; scandals during Civil War including those surrounding U. S. Grant, Jay Gould, and NYSE; raising bonds during Civil War.
Roy C. Smith, Ingo Walter, and Gayle DeLong
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780195335934
- eISBN:
- 9780199932146
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195335934.001.0001
- Subject:
- Economics and Finance, Economic Systems
Few sectors of the global economy have experienced the dynamic and structural change that has occurred over the past several decades in banking and financial services, or as much turbulence and ...
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Few sectors of the global economy have experienced the dynamic and structural change that has occurred over the past several decades in banking and financial services, or as much turbulence and damage to the economy and to individuals. Regulatory and technological changes have been among the main catalysts of transformation in the financial industry worldwide, making entrenched competitive structures obsolete and mandating the development of new products, new processes, new strategies, and new public policies toward the industry. This book attempts to reassess the continuing transformation process of global banking and finance—its causes, its course, and its consequences. It begins with an overview of the most recent developments. Next, the major dimensions of international commercial and investment banking are examined, including money and foreign exchange markets, debt capital markets, international bank lending, derivatives, asset-based and project financing, and equity capital markets. Next, the various advisory businesses—mergers and acquisitions, privatizations, institutional asset management, and private banking—are analyzed. In each case, the factors that distinguish the winners from the losers are identified. This is brought together in the final section of the book, which deals with problems of strategic positioning and execution, as well as with critical risk issues and regulations.Less
Few sectors of the global economy have experienced the dynamic and structural change that has occurred over the past several decades in banking and financial services, or as much turbulence and damage to the economy and to individuals. Regulatory and technological changes have been among the main catalysts of transformation in the financial industry worldwide, making entrenched competitive structures obsolete and mandating the development of new products, new processes, new strategies, and new public policies toward the industry. This book attempts to reassess the continuing transformation process of global banking and finance—its causes, its course, and its consequences. It begins with an overview of the most recent developments. Next, the major dimensions of international commercial and investment banking are examined, including money and foreign exchange markets, debt capital markets, international bank lending, derivatives, asset-based and project financing, and equity capital markets. Next, the various advisory businesses—mergers and acquisitions, privatizations, institutional asset management, and private banking—are analyzed. In each case, the factors that distinguish the winners from the losers are identified. This is brought together in the final section of the book, which deals with problems of strategic positioning and execution, as well as with critical risk issues and regulations.
Philippe Espinasse
- Published in print:
- 2011
- Published Online:
- January 2012
- ISBN:
- 9789888083183
- eISBN:
- 9789882209862
- Item type:
- chapter
- Publisher:
- Hong Kong University Press
- DOI:
- 10.5790/hongkong/9789888083183.003.0001
- Subject:
- Economics and Finance, South and East Asia
This chapter discusses the reasons why a company may wish to go public, and the reasons why not, and sets out what is involved in an initial public offering. It also explains the role played by ...
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This chapter discusses the reasons why a company may wish to go public, and the reasons why not, and sets out what is involved in an initial public offering. It also explains the role played by investment banks in initial public offerings.Less
This chapter discusses the reasons why a company may wish to go public, and the reasons why not, and sets out what is involved in an initial public offering. It also explains the role played by investment banks in initial public offerings.
Mark Fenton-O'Creevy, Nigel Nicholson, Emma Soane, and Paul Willman
- Published in print:
- 2004
- Published Online:
- October 2011
- ISBN:
- 9780199269488
- eISBN:
- 9780191699405
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199269488.001.0001
- Subject:
- Business and Management, Finance, Accounting, and Banking, Organization Studies
This is a book about traders in financial markets: what they do, the kind of people they are, how they perceive the world they inhabit, how they make decisions and take risks. This is also a book ...
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This is a book about traders in financial markets: what they do, the kind of people they are, how they perceive the world they inhabit, how they make decisions and take risks. This is also a book about how traders are managed — the best and the worst examples — and about the institutions they inhabit: firms, markets, cultures, and theories of how the world works. How these institutions function, how traders are managed, and how traders view the world, all have profound effects on the wider financial environment. This book explores these relationships and their implications theoretically and empirically. The data discussed in this book draw on a three-year project researching the psychological and social influences on the behaviour and performance of traders in investment banks. 118 traders and managers in four leading organizations participated. Data were collected through semi-structured interviews supplemented by questionnaires, measures of personality, risk propensity and a novel computer based measure designed to assess illusion of control and other cognitive biases. The book draws on sociology, psychology, and economics in order to illuminate the work of traders and the world they inhabit.Less
This is a book about traders in financial markets: what they do, the kind of people they are, how they perceive the world they inhabit, how they make decisions and take risks. This is also a book about how traders are managed — the best and the worst examples — and about the institutions they inhabit: firms, markets, cultures, and theories of how the world works. How these institutions function, how traders are managed, and how traders view the world, all have profound effects on the wider financial environment. This book explores these relationships and their implications theoretically and empirically. The data discussed in this book draw on a three-year project researching the psychological and social influences on the behaviour and performance of traders in investment banks. 118 traders and managers in four leading organizations participated. Data were collected through semi-structured interviews supplemented by questionnaires, measures of personality, risk propensity and a novel computer based measure designed to assess illusion of control and other cognitive biases. The book draws on sociology, psychology, and economics in order to illuminate the work of traders and the world they inhabit.
Jan Kregel
- Published in print:
- 2010
- Published Online:
- February 2010
- ISBN:
- 9780199578801
- eISBN:
- 9780191723285
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199578801.003.0004
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
Kregel's chapter notes that the United States financial system is currently undergoing its third episode of major financial turmoil and response in the form of financial re‐regulation. The first was ...
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Kregel's chapter notes that the United States financial system is currently undergoing its third episode of major financial turmoil and response in the form of financial re‐regulation. The first was the creation of the national bank system in the 1860s, the second was the New Deal legislation of the 1930s, and the third is that currently under way. The first two episodes produced similar responses and similar financial structures, and laid the basis for subsequent crises. Given the similarity of the present crisis with the two previous experiences, there is, therefore, the risk that the solutions introduced will in fact lay the groundwork for the next crisis.Less
Kregel's chapter notes that the United States financial system is currently undergoing its third episode of major financial turmoil and response in the form of financial re‐regulation. The first was the creation of the national bank system in the 1860s, the second was the New Deal legislation of the 1930s, and the third is that currently under way. The first two episodes produced similar responses and similar financial structures, and laid the basis for subsequent crises. Given the similarity of the present crisis with the two previous experiences, there is, therefore, the risk that the solutions introduced will in fact lay the groundwork for the next crisis.
Philippe Espinasse
- Published in print:
- 2011
- Published Online:
- January 2012
- ISBN:
- 9789888083183
- eISBN:
- 9789882209862
- Item type:
- chapter
- Publisher:
- Hong Kong University Press
- DOI:
- 10.5790/hongkong/9789888083183.003.0002
- Subject:
- Economics and Finance, South and East Asia
This chapter sets out the preparatory work needed for an initial public offering and explains the roles played by different professionals, including the company going public, the investment bank, and ...
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This chapter sets out the preparatory work needed for an initial public offering and explains the roles played by different professionals, including the company going public, the investment bank, and legal, accounting and other professionals. It also explains different forms of IPOs, the complex process of drawing up a prospectus, and the treatment of different categories of investors.Less
This chapter sets out the preparatory work needed for an initial public offering and explains the roles played by different professionals, including the company going public, the investment bank, and legal, accounting and other professionals. It also explains different forms of IPOs, the complex process of drawing up a prospectus, and the treatment of different categories of investors.
Charles R. Geisst
- Published in print:
- 1999
- Published Online:
- November 2003
- ISBN:
- 9780195130867
- eISBN:
- 9780199871155
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195130863.003.0004
- Subject:
- Economics and Finance, Economic History, Financial Economics
Age of the robber barons and role of strong, dominant figures in the development of Wall Street, including Gould, Rockefeller, Pierpont Morgan, and Jacob Schiff. Further development of the markets, ...
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Age of the robber barons and role of strong, dominant figures in the development of Wall Street, including Gould, Rockefeller, Pierpont Morgan, and Jacob Schiff. Further development of the markets, increasing in size and activity, and the development of securities houses and investment banks.Less
Age of the robber barons and role of strong, dominant figures in the development of Wall Street, including Gould, Rockefeller, Pierpont Morgan, and Jacob Schiff. Further development of the markets, increasing in size and activity, and the development of securities houses and investment banks.
G. Anandalingam and Henry C. Lucas
- Published in print:
- 2004
- Published Online:
- September 2007
- ISBN:
- 9780195177404
- eISBN:
- 9780199789559
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195177404.001.0001
- Subject:
- Business and Management, Strategy
In the case of an acquisition or a merger, it is very often the case that when an individual or company perceives itself to be the winner, subsequent events will show that the victory was overvalued. ...
More
In the case of an acquisition or a merger, it is very often the case that when an individual or company perceives itself to be the winner, subsequent events will show that the victory was overvalued. Both psychological and market based forces often lead managers to greatly overestimate what they are buying, resulting in the “winner’s curse”. In an effort to grow their companies, competitive and overly confident managers with high compensation packages make rash decisions. The pressure put on values by the stock market, stock analysts, and investment bankers is coupled with the presence of a bidding psychology. When senior management experiences “buyer’s remorse”, having made overly optimistic forecasts about the future of the company, a true financial “curse” often ensues. In the event that a company does “win” by making it to the top of its industry, complacency or hubris caused by a sense of invulnerability often conspire to move the company out of the winner’s column. This book examines the phenomenon of the “winner’s curse”. It presents a number of cases illustrating the curse, and examines the reasons for it in each instance. It also looks at situations where CEOs decided to walk away from “winning” because of their sober ability to trade-off the risks of winning versus the real returns. In particular, the last chapter presents a series of “take-aways” for any manager to follow to avoid the winner’s curse.Less
In the case of an acquisition or a merger, it is very often the case that when an individual or company perceives itself to be the winner, subsequent events will show that the victory was overvalued. Both psychological and market based forces often lead managers to greatly overestimate what they are buying, resulting in the “winner’s curse”. In an effort to grow their companies, competitive and overly confident managers with high compensation packages make rash decisions. The pressure put on values by the stock market, stock analysts, and investment bankers is coupled with the presence of a bidding psychology. When senior management experiences “buyer’s remorse”, having made overly optimistic forecasts about the future of the company, a true financial “curse” often ensues. In the event that a company does “win” by making it to the top of its industry, complacency or hubris caused by a sense of invulnerability often conspire to move the company out of the winner’s column. This book examines the phenomenon of the “winner’s curse”. It presents a number of cases illustrating the curse, and examines the reasons for it in each instance. It also looks at situations where CEOs decided to walk away from “winning” because of their sober ability to trade-off the risks of winning versus the real returns. In particular, the last chapter presents a series of “take-aways” for any manager to follow to avoid the winner’s curse.
Mary A. O’Sullivan
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199695683
- eISBN:
- 9780191738265
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199695683.003.0011
- Subject:
- Business and Management, Innovation, Business History
Alfred Chandler wrote a great deal on finance capital in the development of big business. In making bold and provocative statements, he provided scholars with a variety of stimulating ideas. To a ...
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Alfred Chandler wrote a great deal on finance capital in the development of big business. In making bold and provocative statements, he provided scholars with a variety of stimulating ideas. To a large extent, however, we still do not know whether Chandler’s assertions were correct. Ultimately, the value of revisiting Chandler’s research on finance capital in the rise of US big business is to understand how much research needs to be done and the questions it needs to address.Less
Alfred Chandler wrote a great deal on finance capital in the development of big business. In making bold and provocative statements, he provided scholars with a variety of stimulating ideas. To a large extent, however, we still do not know whether Chandler’s assertions were correct. Ultimately, the value of revisiting Chandler’s research on finance capital in the rise of US big business is to understand how much research needs to be done and the questions it needs to address.
William Leon Megginson
- Published in print:
- 2005
- Published Online:
- October 2005
- ISBN:
- 9780195150629
- eISBN:
- 9780199835768
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195150627.003.0006
- Subject:
- Economics and Finance, Financial Economics
This chapter examines the structure and investment performance of share issue privatizations (SIPs). SIPs differ from private-sector share issues in almost all respects, except that both use the same ...
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This chapter examines the structure and investment performance of share issue privatizations (SIPs). SIPs differ from private-sector share issues in almost all respects, except that both use the same financial instrument. SIPs were the first truly large share offerings of any type in most countries, so privatizations effectively inaugurated those nations’ investment banking industries. Even in the handful of countries (Britain, Japan, Canada, the United States, and a few continental European countries) where significant share offerings were already established, SIPs transformed the size and efficiency of both that country’s investment banking industry and its stock market.Less
This chapter examines the structure and investment performance of share issue privatizations (SIPs). SIPs differ from private-sector share issues in almost all respects, except that both use the same financial instrument. SIPs were the first truly large share offerings of any type in most countries, so privatizations effectively inaugurated those nations’ investment banking industries. Even in the handful of countries (Britain, Japan, Canada, the United States, and a few continental European countries) where significant share offerings were already established, SIPs transformed the size and efficiency of both that country’s investment banking industry and its stock market.
Dariusz Wójcik
- Published in print:
- 2011
- Published Online:
- September 2011
- ISBN:
- 9780199592180
- eISBN:
- 9780191729089
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199592180.003.0003
- Subject:
- Business and Management, Finance, Accounting, and Banking
Chapter 3 continues the focus on issuers, but this time in an international context. The analysis is based on the most dynamic part of the foreign listing market in 2000s: issuers from Brazil, ...
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Chapter 3 continues the focus on issuers, but this time in an international context. The analysis is based on the most dynamic part of the foreign listing market in 2000s: issuers from Brazil, Russia, India, and China listing their shares in the USA, the UK, and Luxembourg. The results show that these issuers are mostly large firms, coming from relatively high-growth, internationally oriented sectors, and headquartered overwhelmingly in the leading business centres of their home countries. Key intermediaries in the foreign listing process are the global investment banks, linking the locations of the cross-listing firms with the financial centres where the host stock exchanges are located. Competition is fierce, with both the host markets and intermediaries specializing in terms of the size, sector, and geographical origin of the issuers they serve.Less
Chapter 3 continues the focus on issuers, but this time in an international context. The analysis is based on the most dynamic part of the foreign listing market in 2000s: issuers from Brazil, Russia, India, and China listing their shares in the USA, the UK, and Luxembourg. The results show that these issuers are mostly large firms, coming from relatively high-growth, internationally oriented sectors, and headquartered overwhelmingly in the leading business centres of their home countries. Key intermediaries in the foreign listing process are the global investment banks, linking the locations of the cross-listing firms with the financial centres where the host stock exchanges are located. Competition is fierce, with both the host markets and intermediaries specializing in terms of the size, sector, and geographical origin of the issuers they serve.
Arthur E. Wilmarth Jr. Jr.
- Published in print:
- 2020
- Published Online:
- September 2020
- ISBN:
- 9780190260705
- eISBN:
- 9780190260736
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780190260705.003.0003
- Subject:
- Economics and Finance, Financial Economics
Large commercial banks and their securities affiliates helped to finance an unsustainable credit boom and stock market bubble during the 1920s. Charles Mitchell of National City Bank and Albert ...
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Large commercial banks and their securities affiliates helped to finance an unsustainable credit boom and stock market bubble during the 1920s. Charles Mitchell of National City Bank and Albert Wiggin of Chase National Bank pioneered a new universal banking (“financial department store”) business model for large commercial banks. The rise of universal banks resulted in frenzied competition between those institutions and private investment banks. That rivalry resulted in the widespread marketing and sale of speculative, high-risk securities to unsophisticated, poorly informed investors. More than $80 billion of debt and equity securities were issued in the U.S. between 1919 and 1930. The easy availability of financing during the 1920s caused many American companies and households to overexpand and take on excessive debts. Those debt burdens left businesses and consumers in a highly vulnerable position when the credit boom suddenly ended in late 1929.Less
Large commercial banks and their securities affiliates helped to finance an unsustainable credit boom and stock market bubble during the 1920s. Charles Mitchell of National City Bank and Albert Wiggin of Chase National Bank pioneered a new universal banking (“financial department store”) business model for large commercial banks. The rise of universal banks resulted in frenzied competition between those institutions and private investment banks. That rivalry resulted in the widespread marketing and sale of speculative, high-risk securities to unsophisticated, poorly informed investors. More than $80 billion of debt and equity securities were issued in the U.S. between 1919 and 1930. The easy availability of financing during the 1920s caused many American companies and households to overexpand and take on excessive debts. Those debt burdens left businesses and consumers in a highly vulnerable position when the credit boom suddenly ended in late 1929.
Ryunoshin Kamikawa
- Published in print:
- 2013
- Published Online:
- September 2013
- ISBN:
- 9780199662289
- eISBN:
- 9780191749209
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199662289.003.0010
- Subject:
- Economics and Finance, Financial Economics, Macro- and Monetary Economics
This chapter explains why the development of ‘market-based banking’ in Japan remained very low. Because of this, the banking sector of Japan was not damaged significantly by the international ...
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This chapter explains why the development of ‘market-based banking’ in Japan remained very low. Because of this, the banking sector of Japan was not damaged significantly by the international financial crisis. At first glance, this can be explained by institutional factors such the strict regulatory framework and the seniority-based remuneration system, which were suitable for the Japanese ‘group-based CME’. In the 1980s, however, Japanese banks and securities companies expanded international operations and launched investment banking in overseas market, avoiding the domestic regulations. After the bubble burst, they cut back international operations rapidly because banks had to focus on dealing with domestic non-performing loans and because securities companies could not afford to participate in the investment banking business with the continuing sluggish Japanese stock prices. This suggests that Japanese financial institutions were constrained less by regulation than the impact of the bubble bursting.Less
This chapter explains why the development of ‘market-based banking’ in Japan remained very low. Because of this, the banking sector of Japan was not damaged significantly by the international financial crisis. At first glance, this can be explained by institutional factors such the strict regulatory framework and the seniority-based remuneration system, which were suitable for the Japanese ‘group-based CME’. In the 1980s, however, Japanese banks and securities companies expanded international operations and launched investment banking in overseas market, avoiding the domestic regulations. After the bubble burst, they cut back international operations rapidly because banks had to focus on dealing with domestic non-performing loans and because securities companies could not afford to participate in the investment banking business with the continuing sluggish Japanese stock prices. This suggests that Japanese financial institutions were constrained less by regulation than the impact of the bubble bursting.
