Journal of Financial Management, Markets and Institutions (ISSN 2282-717X) Fascicolo 2, luglio-di... more Journal of Financial Management, Markets and Institutions (ISSN 2282-717X) Fascicolo 2, luglio-dicembre 2016 Copyright c by Società editrice il Mulino, Bologna. Tutti i diritti sono riservati. Per altre informazioni si veda https://www.rivisteweb.it Licenza d'uso L'articolò e messo a disposizione dell'utente in licenza per uso esclusivamente privato e personale, senza scopo di lucro e senza fini direttamente o indirettamente commerciali. Salvo quanto espressamente previsto dalla licenza d'uso Rivisteweb, ` e fatto divieto di riprodurre, trasmettere, distribuire o altrimenti utilizzare l'articolo, per qualsiasi scopo o fine. Tutti i diritti sono riservati.
In this paper we analyze the factors that influence the target companies' choice of a bank ad... more In this paper we analyze the factors that influence the target companies' choice of a bank advisor during a merger or acquisition process. Particularly we analyze the choice of hiring an advisor in the first place (non trivial since for more than one third of the mergers in our sample the target company chose not to hire an advisor), and the choice to hire, as advisor, a bank with a strong prior relationship with the company. Using data on 473 M&A European transactions completed the 1994-2003 period we find evidence that the choice of the bank advisor depends on three main factors: i) the intensity of previous banking relationships of the target company, ii) the reputation of the bidder company's advisor, and iii) the complexity of the deal. We also investigate the impact of a bank advisor on shareholders' wealth. We find that the abnormal return of target companies' shareholders increases with the intensity of previous banking relationships, thus indicating a "...
The multiples’ approach to equity valuation is not a new topic and many excellent books are avail... more The multiples’ approach to equity valuation is not a new topic and many excellent books are available. Basically they tend to be typically normative “how to do” books tackling directly the many details and complexities from a practical perspective of the relative valuation approach. We do not discuss the best practices on equity valuation, we prefer to enhance the current knowledge on the topic asking ourselves what kind of performance we may expect from this equity valuation tool given its widespread use in the business community of equity analysts, investment bankers and portfolio managers. In equity valuation, stock market multiples have become one of the most exploited valuation tools used by both professionals and scholars. Multiples are used in research reports and stock recommendations of both buy-side and sell-side analysts, in fairness opinions of investment bankers, or at road shows of companies pursuing an Initial Public Offerings (IPO). Even in cases where the value of a...
Islamic Finance, which is based on the Shari'ah Law, has seen a growing interest in the last ... more Islamic Finance, which is based on the Shari'ah Law, has seen a growing interest in the last few years. This phenomenon is attributable not only to the demographic trends within Muslin countries but also to the wealth accumulated by HNWI and the growing demand to manage it in compliance with religious rules. In this article we will focus on the Islamic asset management and in particular on asset class equity highlighting the main element of the investment process as well as challenges that the industry is facing to reach a more mature stage of development. We will also consider an indices style analysis to highlight effects of the Islamic principles on the portfolio allocation process.
Abstract We study the distribution and properties of valuation errors yielded by banking industry... more Abstract We study the distribution and properties of valuation errors yielded by banking industry multiples for European and U.S. banks. The results highlight that stock-market multiples are best suited for U.S. institutions, and that a two-year-forward P/E is the most precise metric. Contrary to practitioner beliefs, P/tangible book value is less meaningful than P/BV. Multiples are less accurate for small commercial banks than for large ones, and for investment banks than for retail banks. We investigate whether large positive errors lead to one-year positive price performances and negative errors to negative price changes, and find that the forward P/E loses its predictive ability in comparison with historical multiples. Testing three investment strategies, we find that bank multiples can be profitably used in portfolio choices.
Islamic Finance, which is based on the Shari'ah Law, has seen a growing interest in the last ... more Islamic Finance, which is based on the Shari'ah Law, has seen a growing interest in the last few years. This phenomenon is attributable not only to the demographic trends within Muslin countries but also to the wealth accumulated by HNWI and the growing demand to manage it in compliance with religious rules. In this article we will focus on the
Journal of Financial Management, Markets and Institutions (ISSN 2282-717X) Fascicolo 2, luglio-di... more Journal of Financial Management, Markets and Institutions (ISSN 2282-717X) Fascicolo 2, luglio-dicembre 2016 Copyright c by Società editrice il Mulino, Bologna. Tutti i diritti sono riservati. Per altre informazioni si veda https://www.rivisteweb.it Licenza d'uso L'articolò e messo a disposizione dell'utente in licenza per uso esclusivamente privato e personale, senza scopo di lucro e senza fini direttamente o indirettamente commerciali. Salvo quanto espressamente previsto dalla licenza d'uso Rivisteweb, ` e fatto divieto di riprodurre, trasmettere, distribuire o altrimenti utilizzare l'articolo, per qualsiasi scopo o fine. Tutti i diritti sono riservati.
In this paper we analyze the factors that influence the target companies' choice of a bank ad... more In this paper we analyze the factors that influence the target companies' choice of a bank advisor during a merger or acquisition process. Particularly we analyze the choice of hiring an advisor in the first place (non trivial since for more than one third of the mergers in our sample the target company chose not to hire an advisor), and the choice to hire, as advisor, a bank with a strong prior relationship with the company. Using data on 473 M&A European transactions completed the 1994-2003 period we find evidence that the choice of the bank advisor depends on three main factors: i) the intensity of previous banking relationships of the target company, ii) the reputation of the bidder company's advisor, and iii) the complexity of the deal. We also investigate the impact of a bank advisor on shareholders' wealth. We find that the abnormal return of target companies' shareholders increases with the intensity of previous banking relationships, thus indicating a "...
The multiples’ approach to equity valuation is not a new topic and many excellent books are avail... more The multiples’ approach to equity valuation is not a new topic and many excellent books are available. Basically they tend to be typically normative “how to do” books tackling directly the many details and complexities from a practical perspective of the relative valuation approach. We do not discuss the best practices on equity valuation, we prefer to enhance the current knowledge on the topic asking ourselves what kind of performance we may expect from this equity valuation tool given its widespread use in the business community of equity analysts, investment bankers and portfolio managers. In equity valuation, stock market multiples have become one of the most exploited valuation tools used by both professionals and scholars. Multiples are used in research reports and stock recommendations of both buy-side and sell-side analysts, in fairness opinions of investment bankers, or at road shows of companies pursuing an Initial Public Offerings (IPO). Even in cases where the value of a...
Islamic Finance, which is based on the Shari'ah Law, has seen a growing interest in the last ... more Islamic Finance, which is based on the Shari'ah Law, has seen a growing interest in the last few years. This phenomenon is attributable not only to the demographic trends within Muslin countries but also to the wealth accumulated by HNWI and the growing demand to manage it in compliance with religious rules. In this article we will focus on the Islamic asset management and in particular on asset class equity highlighting the main element of the investment process as well as challenges that the industry is facing to reach a more mature stage of development. We will also consider an indices style analysis to highlight effects of the Islamic principles on the portfolio allocation process.
Abstract We study the distribution and properties of valuation errors yielded by banking industry... more Abstract We study the distribution and properties of valuation errors yielded by banking industry multiples for European and U.S. banks. The results highlight that stock-market multiples are best suited for U.S. institutions, and that a two-year-forward P/E is the most precise metric. Contrary to practitioner beliefs, P/tangible book value is less meaningful than P/BV. Multiples are less accurate for small commercial banks than for large ones, and for investment banks than for retail banks. We investigate whether large positive errors lead to one-year positive price performances and negative errors to negative price changes, and find that the forward P/E loses its predictive ability in comparison with historical multiples. Testing three investment strategies, we find that bank multiples can be profitably used in portfolio choices.
Islamic Finance, which is based on the Shari'ah Law, has seen a growing interest in the last ... more Islamic Finance, which is based on the Shari'ah Law, has seen a growing interest in the last few years. This phenomenon is attributable not only to the demographic trends within Muslin countries but also to the wealth accumulated by HNWI and the growing demand to manage it in compliance with religious rules. In this article we will focus on the
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