Role of US Corporate Finance in Financial Industry

By | March 23, 2012

Corporate finance is the task of providing funds to small businesses, which involves in balancing risk and profitability and also interrelated decisions like investment decisions, financing decisions and dividend decisions.

U.S corporate finance group adds an important dimension to capital markets and international securities. It also advises on the U.S law aspects of a variety of other cross-border corporate finance transactions, including:

  • Joint ventures
  • Mergers, acquisitions and trade sales
  • Tender offers and exchange offers
  • Private equity and venture capital transactions

Corporate finance is the key factor in the share of finance in U.S. Besides globalization, increased trading and development of mutual funds, the most important elements in explaining the trends of finance industry are credit intermediation and corporate finance.

Corporate finance acts as a major role in the maximization of shareholder finance. It increases shareholder value through two related activities i.e. financing the business at a lower after-tax cost and allocating capital resources to investments that promise the high risk-adjusted returns to investors.

By looking at the non financial sector like globalization and trading, there is a shift in the distribution of investment opportunities towards low cash firms which led to the increased demand for financial services over the past fifty years. This demand shift of corporate finance accounts for a large part of the increase in the size of the finance industry.

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