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JOURNAL CORPORATE FINANCE

This section provides access to the abstracts of recent CORPORATE FINANCE articles.

Basel III and Valuation

BASEL III UND BANKBEWERTUNG – AUSWIRKUNGEN DER VERSCHÄRFTEN EIGENKAPITALANFORDERUNGEN AUF DEN UNTERNEHMENSWERT

Prof. Dr. Bernhard Schwetzler
Corporate Finance, 12(2015), p. 458-467
The Basel III accord increases the minimum requirements for bank´s equity on their balance sheet. This paper analyzes the impact of the increased regulatory requirements upon the equity value of a Bank. Critics argue the new regulation making credits to customers more expensive and reducing the equity value of banks. Based on an idealized model it is shown that, given an optimal business and financing strategy of a bank with and without the stricter regulation, the stricter equity requirements do not have any impact on the market value of a bank. >more


Challenging Stock Prices

CHALLENGING STOCK PRICES: AKTIENPREISE UND IMPLIZITE WACHSTUMSERWARTUNGEN

Michael Babbel
Corporate Finance, 09(2015), p. 316-323
The investor is able to generate abnormal returns by identifying mispriced securities. The paper at hands shows: It is not necessary to estimate the (seemingly) “real” intrinsic value of a firm to assess the appropriateness of stock prices. Rather, it is already constructive to decode the growth assumptions with respect to future profits the market formulates and embeds in stock prices. It is illustrated how an investor is able to incorporate the market’s growth assumptions into his investment decisions deploying fundamental analysis. >more


Success of M&A-transactions

KONZEPTE DER ERFOLGSMESSUNG BEI M&A-TRANSAKTIONEN

Prof. Dr. Thomas Loy and Georg Stammel
Corporate Finance, 01/02(2016), p. 38-44
This article presents and compares methods to measure the success of M&A-transactions. First, methods based on financial accounting data analyze the change in a firm’s financial position and profitability as well as productivity and efficiency of production following the transaction. Second, capital market-based methods measure perceived success through changes in stock prices following the transaction announcement. Moreover, event-driven, interview-based and case study methods are discussed. >more


general framework for DCF-valuation

EIN DCF-BAUKASTEN: ZUR BEWERTUNG ZUSAMMENGESETZTER ZAHLUNGSSTRÖME

Prof. Dr. Andreas Schüler
Corporate Finance, 12(2015), p. 474-481
DCF-valuation or multiples are used for valuing companies in practice. Starting with the value additivity principle the paper presents a general framework for DCF-valuation. This framework can be used to define stepwise and aggregated approaches for valuing risky cash flows. It also illustrates the assumptions implied by using multiples. >more


Delisting

ANLEGERSCHUTZ BEIM BÖRSENRÜCKZUG IM SPANNUNGSFELD ZWISCHEN RECHTSDOGMATIK, JURISPRUDENZ UND RECHTSTATSACHENFORSCHUNG – PROBLEMSKIZZE UND WÜRDIGUNG AUS ÖKONOMISCHER SICHT

Dr. Behzad Karami and René Schuster
Corporate Finance, 4(2016), p. 106-119
This article analyses the current discussion about delisting under the German law from an economic point of view. Since the amendment of section 39 of the German Stock Exchange Act (BörsG) issuers seeking to revoke the admission of trading their shares on a regulated market must submit a compensation offer to all shareholders. This new provision was a response by the legislator after shareholders faced significant share price losses around the announcement day of a delisting due to the fact that Germany’s Federal Court of Justice (BGH) had abandoned its longstanding shareholder protecting rules on delisting in 2013. However, with regards to two particular specifications the revised section 39 of the BörsG is not convincing. On one hand, there is no need to count a downlisting as a delisting, because there is no empirical evidence on negative stock market reactions upon announcements of downlistings. On the other hand, we disagree with the legislator insofar that from our point of view there also is no need for shareholder protection in cases of a great illiquidity of the concerned traded shares. >more


non-dilutive Convertible Bond

NON-DILUTIVE CONVERTIBLE BONDS: A NEW KID IN TOWN

Dr. Achim Schäcker, Christopher Johannson, and David Haberfellner
Corporate Finance, 3(2016), p. 49-52
Although only seven issues have been recorded EMEA-wide over the last 24 months, non-dilutive Convertible Bond structures have captured the attention of many European corporates and been very much at the centre of most equity-linked discussions throughout 2015. HSBC anticipates similar discussions to continue in 2016. A plain vanilla Convertible Bond at the outset, the repurchase of the embedded call-option provides issuers de facto with a Senior Bond under an equity-linked execution framework. Thus, non-dilutive Convertible Bonds are neither fish nor fowl when it comes to the question where equity-linked capital markets end and debt capital markets start. In the right environment, they can represent a smart way for debt issuers to successfully arbitrate different markets and execution standards while saving interest costs and diversifying their investor base. This paper by HSBC examines the key features of non-dilutive Convertible Bonds for German issuers and attempts to give an outlook on what to expect for 2016. >more


M&A deal announcement premiums

M&A-ÜBERNAHMEPRÄMIEN: EIN VERGLEICH VON BRANCHEN, LÄNDERN, TYPEN UND ZEITPUNKTEN

Felix Rößle, and Kathrin Lesser
Corporate Finance, 3(2016), p. 85-88
M&A is a highly researched field in science. Based on 16,281 M&A-Deals from the Thomson Reuters Deal database between the years 2000 to 2014, this work shows M&A deal announcement premiums in a country, sector, type and time comparison. We show that the premiums paid for a successful M&A are declining over time prior to the announcement of the deal. This applies with respect to countries, sectors, types as well as to crises and non-crises periods. >more


Bankruptcy and Valuation

ZAHLUNGSSTROMBEZOGENE INSOLVENZRISIKEN UND IHRE ABBILDUNG IN DER UNTERNEHMENSBEWERTUNG

Prof. Dr. Matthias Meitner, and Prof. Dr. Felix Streitferdt
Corporate Finance, 3(2016), p. 68-79
Currently, there is an intensive ongoing discussion about how to integrate the effects of bankruptcy into business valuation models. A very intensively debated approach is to adjust the expected cashflows by a survival probability. In this article it is shown that such an approach would demand unrealistic cash flow forecasting techniques. Additionally, it is shown why bankruptcy is irrelevant for the company value on a perfect capital market. Bankruptcy only influences company value if it either alters the value of the tax shield or if direct or indirect bankruptcy costs occur. Due to this result, we integrate bankruptcy costs into the DCF-Valuation formulas and present a methodology for estimating the risk adequate discount rate for bankruptcy costs. >more


Market Risk Premia

Implizite Marktrisikoprämien – Konsistente Ermittlung und Anwendung

Dr. Jochen Beumer, Coporate Finance 2015 S. 330, CF0990885
Market risk premia derived from historical stock returns as well as implied market risk premia based on stock prices and forecasted returns turn out to lead to widely diverging risk premia as the result of different models and their underlying assumptions. The new study presented in this article was designed to derive the implicit market risk premium that is in line with valuations according to the IDW S 1 guidelines. Furthermore, application issues of the implicit risk premium are discussed. >more


Market Risk Premia

Peers, Marktrisikoprämie und Insolvenzrisiko: Einige Anmerkungen zu drei Problemen der Unternehmensbewertung

Prof. Dr. Dr. h.c. Wolfgang Ballwieser / Dr. Tobias Friedrich, CORPORATE FINANCE 2015 S. 449, CF1164084
The paper is concerned with three problems of the theory of business valuation: the assignation of peers, the determination of the equity risk premium and the due consideration of insolvency risk in DCF models. The authors show how problematic the assignation of peers is and require transparency and justification of peers in expert valuation reports. With respect to equity risk premiums the paper discusses problems of consistency concerning the risk-free rate of return and proposes a new estimation method. We further show how insolvency risk may be considered by means of a studiously simple example. >more


Steady State and Value Neutrality

Continuing Value in Disunion: Steady State or Value Neutrality?

Prof. Dr. Leonhard Knoll, CORPORATE FINANCE 2016 S. 33, CF1188534
The article shows that the conventional requests “steady state” and “value neutrality” for an eternal rent cannot be fulfilled together. Looking at this disunion, one has to take a choice between the mutually exclusive alternatives if one assumes an eternal rent. Regularly, the better decision will be in favor of a steady state. >more