TY  - BOOK
AU  - Krause, Andreas
TI  - Theoretical Foundations of Investment Banking / by Krause , Andreas
SN  - 9783031580598
U1  - 332.6 
PY  - 2024///
CY  - Switzerland: 
PB  - Springer
KW  - Investment Banking
N1  -  1 Introduction................................................................. 1
 2 Prologue:PracticesandProcessesinInvestmentBanking............. 7
 2.1 MergersandAcquisitionsAdvice................................... 8
 2.2 SecuritiesUnderwriting.............................................. 12
 2.3 FinancialAnalystResearch.......................................... 18
 2.4 TradingandSales .................................................... 21
 2.5 ManagingInvestmentBanks......................................... 24
 PartI InvestmentBanksasIntermediaries
 3 SellingInformation......................................................... 31
 4 InformedIntermediaries................................................... 37
 4.1 ReducingAdverseSelection......................................... 37
 4.2 QualityofSecuritiesIssued.......................................... 42
 Conclusions .................................................................. 48
 5 IndependentFinancialAdvice ............................................ 51
 ReviewofPartI
 PartII CorporateFinance
 6 MergersandAcquisitionsAdvisory...................................... 63
 6.1 ContingentFeeContracts............................................ 65
 6.1.1 EliminatingMoralHazardinMergerAdvice.............. 65
 6.1.2 MergerAdvicewithAdverseSelection.................... 68
 6.2 AcceptingMergerOffers ............................................ 71
 6.3 Break-upfees......................................................... 75
 Conclusions .................................................................. 78
 7 SecuritiesUnderwriting.................................................... 81
 7.1 UnderwritingContracts.............................................. 82
 7.1.1 FirmCommitmentandBestEffortsContracts............. 83
 7.1.2 Book-Building............................................... 87
 7.2 AppointingUnderwriters ............................................ 96
 xi
xii Contents
 7.2.1 UnderwriterSelection....................................... 96
 7.2.2 UnderwritingSyndicates.................................... 101
 7.3 Underpricing.......................................................... 107
 7.3.1 PreventingAdverseSelection............................... 108
 7.3.2 RelationshipBuilding....................................... 110
 7.3.3 LitigationRisk............................................... 114
 7.3.4 SecurityFlipping............................................ 116
 7.3.5 MonitoringofIssuingCompany............................ 117
 7.4 GreenshoeOption.................................................... 123
 7.5 ChoiceofUnderwrittenSecurities .................................. 125
 7.6 UnderwritingbyUniversalBanks................................... 128
 Conclusions .................................................................. 131
 ReviewofPartII
 PartIII Research
 8 BiasedAnalystRecommendations........................................ 137
 8.1 FinancialAnalystAccesstoCompanyInformation................ 138
 8.2 ObtainingFutureInvestmentBankingBusiness.................... 140
 Conclusions .................................................................. 144
 9 AnalystReputation......................................................... 145
 10 RegulationofFinancialAnalysts ......................................... 153
 ReviewofPartIII
 PartIV TradingandSales
 11 FinancialInnovation....................................................... 163
 11.1 IncentivestoInnovate................................................ 164
 11.2 IntroductiontoInnovations.......................................... 167
 11.3 AdoptionofInnovations ............................................. 172
 Conclusions .................................................................. 176
 12 AssetManagement ......................................................... 177
 13 BrokerageServices ......................................................... 183
 14 MarketMaking............................................................. 189
 14.1 InventoryControl..................................................... 190
 14.2 AdverseSelection.................................................... 195
 Conclusions .................................................................. 198
Contents xiii
 15 ProprietaryTrading........................................................ 201
 15.1 InvestmentinExpertise.............................................. 202
 15.2 RemunerationofTraders............................................. 205
 15.3 MisrepresentationofTradingOutcomes............................ 213
 15.4 DualCapacity ........................................................ 216
 Conclusions .................................................................. 229
 ReviewofPartIV
 PartV ConductingInvestmentBankingBusiness
 16 EmploymentPolicies....................................................... 235
 16.1 OptimalRemuneration............................................... 236
 16.2 PromotionPractices.................................................. 242
 Conclusions .................................................................. 249
 17 Partnerships................................................................. 251
 17.1 ViabilityofPartnerships ............................................. 252
 17.2 TheImpactonServiceQuality...................................... 256
 Conclusions .................................................................. 261
 18 TheDecision-MakingProcess ............................................ 263
 18.1 TheImpactoftheOrganisationalStructure......................... 263
 18.2 DelegationofDecision-Making..................................... 268
 Conclusions .................................................................. 272
 19 RelationshipBanking...................................................... 273
 20 OptimalInvestmentBanks ................................................ 279
 20.1 SpecialisationofInvestmentBanks ................................. 279
 20.2 MatchingBanksandClients......................................... 286
 Conclusions .................................................................. 288
 ReviewofPartV
 Epilogue:EthicalConsiderations .............................................. 293
 FinalReflections.................................................................. 301
 ProblemSets...................................................................... 305
 ProblemsSetsforPartI...................................................... 305
 ProblemsSetsforPartII..................................................... 309
 ProblemsSetsforPartIII.................................................... 322
 ProblemsSetsforPartIV.................................................... 326
 ProblemsSetsforPartV.................................................... 336
 ProblemSetsforthePrologueandEpilogue............................... 347
xiv Contents
 A MathematicalTools......................................................... 353
 A.1 ImplicitFunctions.................................................... 353
 A.2 ConstrainedOptimisation............................................ 354
 A.2.1 LagrangeMultiplier......................................... 354
 A.2.2 Karush-Kuhn-TuckerConditions........................... 355
 A.3 BayesianLearning.................................................... 357
 A.4 LeibnizIntegralRule................................................. 358
 A.5 StatisticalTools....................................................... 359
 A.5.1 ConditionalMoments....................................... 359
 A.5.2 OrderStatistics .............................................. 360
 B EconomicModels........................................................... 361
 B.1 NashBargaining...................................................... 361
 B.2 TacitCollusion ....................................................... 362
 B.3 RiskAversion......................................................... 364
 B.4 MonopolisticCompetition........................................... 365
 B.4.1 HotellingModel............................................. 367
 B.4.2 SalopCircle.................................................. 368
 C CreditRiskAssessment.................................................... 371
 C.1 TheMertonModel ................................................... 372
 C.2 TheKMVModel..................................................... 373
 C.3 TheVasicekModel................................................... 373
 D SecurityValuation.......................................................... 377
 D.1 DiscountedCashFlow............................................... 377
 D.2 ComparableCompaniesAnalysis ................................... 378
 D.3 PrecedentsTransactionsAnalysis................................... 379
 D.4 DerivativesPricing................................................... 379
 Glossary........................................................................... 381
 References......................................................................... 389
 Index............................................................................... 393
ER  -