Investment Banking And M&A Of Corporation: The Problems In China And The Analysis Of Measures

During the experience of M&A in developed countries, investment banking has an important rule. As the offspring of division of dealing function, investment banking can decrease cost of information, contracting cost and other cost of insurance for acquiring firm and target firm. Investment banking can save costs from different aspects owing to scale economies in information. we explain how investment banking can down transaction costs with classic economics and new institutional economics. However, not all firms take the advice of investment bank and some firms choose the mode of in-house. So we use dynamic model to analyze the condition that investment banking take part in M&A. Apart from the factors within investment banking, capital market, market of property right and institutions can also increase the operation cost that investment banking service for acquiring firm and target firm. The operation cost will influence the decision whether firm choose mode of in-house acquisition or the acquisition with investment banking. Investment banking is in primary phases in China ,we compare it with developed countries' and find the differences. then we analyze how to create conditions for investment banking to participate in M&A.