Financial Services Firms

Financial Services Firms

Governance, Regulations, Valuations, Mergers, and Acquisitions
Wiley Corporate F&A, Band 14 3. Aufl.

von: Zabihollah Rezaee

80,99 €

Verlag: Wiley
Format: PDF
Veröffentl.: 09.06.2011
ISBN/EAN: 9781118098516
Sprache: englisch
Anzahl Seiten: 600

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<b>Indispensable coverage of new federal regulatory reforms and federal financial issues</b> <p><b>An essential guide covering new federal regulatory reforms and federal financial issues</b></p> <p><i>Financial Institutions, Valuations, Mergers and Acquisitions, Third Edition</i> presents a new regulatory framework for financial institutions in the post-bailout era.</p> <ul> <li>Provides valuable guidance to assess risks, measure performance and conduct valuations processes to create shareholder value</li> <li>Covers the protection of other stakeholders, including customers, regulators, government, and consumers</li> <li>Offers an up-to-date understanding of financial institutions, their challenges, and their opportunities in the post-Sarbanes-Oxley era</li> </ul> <p>Over the past decade, substantial changes have taken place in the structure and range of products and services provided by the financial services industry. Get current coverage of these changes that have transformed both traditional organizations such as banks, thrifts, and insurance companies, as well as securities providers, asset management companies and financial holding companies with the up-to-the-minute coverage found in Financial Institutions, Valuations, Mergers and Acquisitions, Third Edition.</p>
<b>Preface xi</b> <p><b>Acknowledgments xvii</b></p> <p><b>PART I: FINANCIAL SERVICES INDUSTRY: ITS MARKETS, REGULATIONS, AND GOVERNANCE 1</b></p> <p><b>Chapter 1: Fundamentals of the Financial Markets and Institutions 3</b></p> <p>Introduction 3</p> <p>Financial Markets 3</p> <p>Financial Information and Capital Markets 4</p> <p>Financial Crisis and Financial Regulatory Reforms 5</p> <p>Types and Roles of Financial Markets 15</p> <p>Financial Services Firms 21</p> <p>Conclusion 24</p> <p>Notes 25</p> <p><b>Chapter 2: Introduction to Financial Institutions 27</b></p> <p>Introduction 27</p> <p>Landscape of the Financial Services Industry 27</p> <p>Structural Changes in the Financial Services Industry 28</p> <p>Historical Perspective of American Banking 42</p> <p>Current Trends in the Financial Services Banking Industry 43</p> <p>Regulatory Reforms 46</p> <p>Valuation Process 55</p> <p>Conclusion 56</p> <p>Notes 57</p> <p><b>Chapter 3: Corporate Governance 61</b></p> <p>Introduction 61</p> <p>Corporate Governance Effectiveness 62</p> <p>Global Regulatory Reforms 66</p> <p>Sarbanes-Oxley Act of 2002 70</p> <p>Dodd-Frank Act 74</p> <p>Corporate Governance Functions 75</p> <p>Board of Directors and Its Committees 78</p> <p>Audit Committee Roles and Responsibilities 80</p> <p>Executive Compensation 84</p> <p>Conclusion 86</p> <p>Notes 86</p> <p><b>PART II: THE FOUNDATION: FINANCIAL INSTITUTIONS, VALUATIONS, MERGERS, ACQUISITIONS, AND REGULATORY AND ACCOUNTING ENVIRONMENT 89</b></p> <p><b>Chapter 4: Overview of the Valuation Process 91</b></p> <p>Introduction 91</p> <p>Valuation Services 92</p> <p>Valuation Profession 94</p> <p>Valuation of the Business 97</p> <p>Attracting Valuation Clients 105</p> <p>Accepting a Client 109</p> <p>Pricing Valuation Services 111</p> <p>Importance of the Engagement Letter 112</p> <p>Planning an Appraisal Engagement 114</p> <p>General Planning 118</p> <p>Appraiser’s Traits 121</p> <p>Appraiser’s Due Diligence Process 124</p> <p>Risk Assessment 125</p> <p>Conclusion 126</p> <p>Notes 126</p> <p><b>Chapter 5: Overview of Mergers and Acquisitions 127</b></p> <p>Introduction 127</p> <p>Historical Perspective of Mergers and Acquisitions 128</p> <p>Recent Trends in Mergers and Acquisitions 130</p> <p>Regulations of Bank Mergers 136</p> <p>Players in Mergers and Acquisitions 142</p> <p>Motives for Business Combinations 146</p> <p>Determinants of Mergers and Acquisitions 148</p> <p>Perceived Shortcomings of Mergers and Acquisitions 152</p> <p>Studies on Mergers and Acquisitions 155</p> <p>Leveraged Buyout 159</p> <p>Post Mergers and Acquisitions Performance 160</p> <p>Shareholder Wealth and Effect of Mergers and Acquisitions 161</p> <p>Joint Ventures and Strategic Alliances 162</p> <p>Ethics in Mergers and Acquisitions 163</p> <p>Governance in Mergers and Acquisitions 164</p> <p>Mergers and Acquisitions Process 165</p> <p>Conclusion 181</p> <p>Notes 183</p> <p><b>Chapter 6: Regulatory Environment and Financial Reporting Process of Financial Institutions 187</b></p> <p>Introduction 187</p> <p>Consolidation 187</p> <p>Regulatory Environment 192</p> <p>Bank Supervision 198</p> <p>Financial Modernization: The Gramm-Leach-Bliley Act 205</p> <p>Financial Reporting Process of Financial Institutions 208</p> <p>Statement of Financial Accounting Standards No. 115 212</p> <p>Auditing Proper Classifications of Marketable Securities 214</p> <p>Tax Consideration of Fair Value 215</p> <p>Recent Development of Fair Value Accounting 218</p> <p>Financial Reporting Requirements of Financial Institutions 222</p> <p>Corporate Governance of Financial Institutions 228</p> <p>Conclusion 237</p> <p>Notes 238</p> <p><b>PART III: FUNDAMENTALS OF VALUATIONS: CONCEPTS, STANDARDS, AND TECHNIQUES 241</b></p> <p><b>Chapter 7: Value and Valuation: A Conceptual Foundation 243</b></p> <p>Asset-Liability Management 243</p> <p>Investment Management 245</p> <p>Lending Management 246</p> <p>Liquidity Management 247</p> <p>Nature of Value 249</p> <p>Twelve Concepts of Value 250</p> <p>Types of Property that Can Be Valued 260</p> <p>Relationship among Different Types of Value 261</p> <p>Principles of Valuation Theory 262</p> <p>Pricing Value versus Reporting Value 263</p> <p>Limitations of the Valuation Process 264</p> <p>Conclusion 264</p> <p>Notes 264</p> <p>Chapter 8: Approaches to Measuring Value 267</p> <p>Overview of the Valuation Process 267</p> <p>Cost Approach to Valuation 268</p> <p>Market Approach to Valuation 270</p> <p>Income Approach to Valuation 273</p> <p>Special Topics—Approaches to Intangible Asset Valuation 291</p> <p>Special Topics—Business Valuation 294</p> <p>Valuation and Business Concentrations 300</p> <p>Special Topics—Closely Held Stock 301</p> <p>Special Topics—Valuing Widely Traded Companies 304</p> <p>Conclusion 305</p> <p>Notes 305</p> <p><b>Chapter 9: Valuations for Tax and Accounting Purposes 307</b></p> <p>Tax Aspects of Mergers and Acquisitions 307</p> <p>Typical Tax-Oriented Valuations 310</p> <p>Accounting Aspects of Mergers and Acquisitions 313</p> <p>Typical Accounting-Oriented Valuations 319</p> <p>Acquisition Method 320</p> <p>Presentation, Disclosure, and Transition Requirements of Business Combinations 324</p> <p>Convergence in Accounting Standards on Mergers and Acquisitions 327</p> <p>Conclusion 328</p> <p>Notes 329</p> <p><b>Chapter 10: Intangible Asset Valuation 331</b></p> <p>Nature and Types of Intangible Assets 331</p> <p>Amortizable versus Nonamortizable Intangible Assets 334</p> <p>Measuring the Useful Life of an Intangible Asset 336</p> <p>Establishing Value of Intangible Assets 338</p> <p>Amortization Methods 341</p> <p>Supporting Intangible Asset Valuation and Amortization 341</p> <p>Goodwill Impairment 342</p> <p>Conclusion 343</p> <p>Notes 344</p> <p><b>PART IV: ASSESSMENT OF FINANCIAL INSTITUTIONS 345</b></p> <p><b>Chapter 11: Financial Analysis of Banks and Bank Holding Companies 347</b></p> <p>Types and Sources of Financial Data 347</p> <p>Overview of Financial Statements 351</p> <p>Composition of Bank Assets 355</p> <p>Composition of Bank Liabilities 359</p> <p>Off–Balance Sheet Items 361</p> <p>Composition of Bank Capital 362</p> <p>Regulatory Capital Components 364</p> <p>Risk-Based Capital 367</p> <p>Value-at-Risk Models 370</p> <p>Composition of Bank Income 371</p> <p>Composition of Bank Expenses 373</p> <p>Balance Sheet Analysis Illustration 376</p> <p>Income Statement and Profitability Analysis Illustration 381</p> <p>Loan Risk Analysis Illustration 385</p> <p>Liquidity and Investment Portfolio Analysis Illustration 389</p> <p>Portfolio Equities Analysis (REALM Model) 390</p> <p>Special Bank Holding Company Considerations 391</p> <p>Liability Management 392</p> <p>Conclusion 392</p> <p>Notes 392</p> <p><b>Chapter 12: Internal Characteristics Assessment 395</b></p> <p>Objectives and Benefits of an Internal Characteristics Assessment 396</p> <p>Ten P Factor Framework 396</p> <p>Shareholder Value Creation 405</p> <p>Conclusion 412</p> <p>Notes 413</p> <p><b>Chapter 13: External Environment Assessment 415</b></p> <p>Impact of External Environment on Value 415</p> <p>Political Analysis 416</p> <p>Economic Analysis 416</p> <p>Social Analysis 417</p> <p>Technological Analysis 420</p> <p>Other Analysis 421</p> <p>Conclusion 423</p> <p>Notes 423</p> <p><b>PART V: VALUATION OF MERGERS AND ACQUISITIONS 425</b></p> <p><b>Chapter 14: Bank Merger and Acquisition Process 427</b></p> <p>Strategy Phase 427</p> <p>Negotiation and Investigation Phase 435</p> <p>Finalization and Integration Phase 439</p> <p>Other Considerations 443</p> <p>Conclusion 446</p> <p>Notes 446</p> <p><b>Chapter 15: Valuing a Bank as a Business Enterprise 447</b></p> <p>Business Enterprise versus a Collection of Assets 447</p> <p>Concept of the Banking Franchise 448</p> <p>Difference between Strategic and Tactical Valuations 449</p> <p>Why the Cost Approach Is Not Used for Strategic Bank Valuations 450</p> <p>Application of the Market Approach to Valuing a Bank 450</p> <p>Application of the Income Approach to Valuing a Bank 454</p> <p>Sensitivity of Value Estimate to Assumption Changes 461</p> <p>Value-Creation Opportunities and the Acquisition Price 463</p> <p>Valuation Methods for Mergers and Acquisitions 465</p> <p>Sophisticated Valuation Techniques for Mergers and Acquisitions 470</p> <p>Relation between Price and Value and Effect on Stockholders 475</p> <p>Conclusion 478</p> <p>Notes 478</p> <p><b>Chapter 16: Valuation of Tangible Bank Assets 479</b></p> <p>Tangible Physical Assets 480</p> <p>Tangible Financial Assets 481</p> <p>Tangible Assets in Bank Mergers and Acquisitions 486</p> <p>Intangible Assets in Bank Mergers and Acquisitions 486</p> <p>Conclusion 487</p> <p><b>Chapter 17: Core Deposits as a Special Type of Intangible Asset Valuation 489</b></p> <p>Concept of Core Deposit Base as an Intangible Asset 489</p> <p>Internal Revenue Service Position on Core Deposits 490</p> <p>Important Core Deposit Tax Court Cases 490</p> <p>Deposits to Be Included in Valuation 497</p> <p>Alternative Approaches to Valuing a Core Deposit Base 497</p> <p>Core Deposit Base Life Estimation 499</p> <p>Application of the Cost Savings Approach 502</p> <p>Application of the Future Income Approach 505</p> <p>Systemically Important Financial Institutions 508</p> <p>Conclusion 511</p> <p>Notes 511</p> <p><b>Chapter 18: Derivative Financial Instruments 513</b></p> <p>Authoritative Guidelines on Derivatives 515</p> <p>Derivative Markets 516</p> <p>Derivatives Risk Management 518</p> <p>Derivatives Risk Management Policy 519</p> <p>Accounting for Derivatives 528</p> <p>Tax Considerations of Derivatives 535</p> <p>Audit of Derivative Transactions 535</p> <p>Sources of Information on Derivatives 537</p> <p>Derivatives Valuation Models 538</p> <p>Derivatives under the Dodd-Frank Act of 2010 542</p> <p>Conclusion 543</p> <p>Notes 543</p> <p><b>Chapter 19: Real-World Bank Valuation Complications 547</b></p> <p>Banks Experiencing Recent Losses 548</p> <p>Banks with Low Equity Capital 551</p> <p>Banks with Uncertain Future Loan Loss Exposure 554</p> <p>Preferred and Common Stock 556</p> <p>Highly Leveraged Banks 557</p> <p>Branch Acquisitions 557</p> <p>European Banking Model 559</p> <p>Initial Public Offering 561</p> <p>Islamic Banking System 562</p> <p>Emerging Issues in the Financial Services Industry 564</p> <p>Conclusion 568</p> <p>Notes 568</p> <p>About the Author 569</p> <p>Index 571</p>
<b>ZABIHOLLAH REZAEE, PhD, CPA, CFE, CMA, CIA, CGFM</b>, is the Thompson-Hill Chair of Excellence and Professor of Accountancy at the University of Memphis and has served a two-year term on the Standing Advisory Group (SAG) of the PCAOB. He is a prolific writer, having published six books and 190 articles in a variety of accounting and business journals.
Presenting new regulatory and corporate governance measures for the financial services industry in the post-bailout era—including the Dodd-Frank Act of 2010 and Basel Committee requirements—<i>Financial Services Firms, Third Edition</i> offers valuable guidance for CEOs, CFOs, CPAs, attorneys, bankers, and business appraisers in assessing risks, measuring performance, analyzing financial information, establishing corporate governance measures, and conducting valuations processes. This important book is an authoritative source in the areas of consolidation, convergence, competition, deregulations, accounting and auditing standards, corporate governance, business sustainability, and technological advances. <p>At once a beneficial primer for those with a cursory knowledge of banking, valuation, and mergers, as well as a useful reference for seasoned professionals, this book helps you understand the entire valuation process from a mergers and acquisition perspective.</p> <p>Renowned financial expert Zabihollah Rezaee offers up-to-the-minute, straightforward guidance on:</p> <ul> <li> <p>New and emerging federal regulations for financial institutions and financial services</p> </li> <li> <p>Initiatives affecting financial reporting and auditing functions</p> </li> <li> <p>Technological advances and globalization</p> </li> <li> <p>Sarbanes-Oxley Act (SOX) and Securities and Exchange Commission (SEC)-related implementation rules</p> </li> <li> <p>The Dodd-Frank Act, Basel Committee, and auditing standards issued by the Public Company Accounting Oversight Board (PCAOB)</p> </li> <li> <p>Recent financial accounting standards under U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)</p> </li> <li> <p>Emerging financial reporting and auditing initiatives, including the movement toward IFRS and PCAOB Auditing Standards as well as the use of eXtensible Business Reporting Language (XBRL) reporting platform</p> </li> <li> <p>Convergence in the global corporate governance reforms</p> </li> <li> <p>The impact of geographic and product deregulations, accounting standards, and global competition on future convergence in the financial services industry</p> </li> </ul> <p><i>Financial Services Firms, Third Edition</i> is the ideal sourcebook to help you keep up with—and benefit from—the changes in this important industry.</p>
<b>Now that the dust has settled from the government bailouts, it's time to take a look at the new best practices in governance, regulations, valuations, mergers, and acquisitions</b> <p>A recent report from the Financial Crisis Inquiry Commission (FCIC) suggested the 2007–2009 financial crisis—caused by ineffective regulations that failed to ensure the soundness of the financial system—could have been avoided.</p> <p>Thoroughly updated, Rezaee's <i>Financial Services Firms, Third Edition</i> presents a new regulatory framework for financial institutions in the post-bailout era. This book answers important questions surrounding financial institutions, their challenges, and their opportunities in the post-Sarbanes-Oxley era with a clear look at:</p> <ul> <li> <p>Emerging initiatives affecting financial reporting and governance functions</p> </li> <li> <p>Recent financial accounting standards under GAAP and IFRS on business combinations and fair value</p> </li> <li> <p>The Dodd-Frank Act of 2010 and its related implementation rules</p> </li> <li> <p>SOX- and SEC-related implementation rules</p> </li> <li> <p>Executive compensation standards for the banking industry</p> </li> <li> <p>Bailouts of troubled financial institutions</p> </li> <li> <p>Government efforts to influence bank rescues through the Trouble Asset Relief Program (TARP)</p> </li> </ul> <p>Whether you are a financial analyst, mergers and acquisitions appraiser, regulator, banker, or auditor, you need the latest coverage on the changes taking place in the financial services industry with the expert advice found in <i>Financial Services Firms, Third Edition.</i></p>