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NEWSLETTER of April 12, 2019

 

The following content has been added at finexpert:


Studies > Performance

Morgan Stanley / Oliver Wyman

ASSET MANAGERS & WHOLESALE BANKS – SEARCHING FOR GROWTH IN AN AGE OF DISRUPTION

Asset managers and wholesale banks are under increasing investor pressure to accelerate growth while managing down costs. Yet both are facing falling margins and a market environment that is disappointing relative to expectations. Fundamental shifts in market structure and client behaviour mean that firms with the weakest starting point are increasingly disadvantaged. They will have to balance competing demands to defend core markets with the need to follow the money and find long-term growth. The cost of catching up is increasing. >more

Studies > Performance

Deloitte

CLIMATE FINANCE – GEEIGNETE ANSÄTZE ZUR BEWERTUNG VON CARBON RISIKEN

Climate change is currently not only present on the global political agenda, but the consideration of climate risks is also gaining importance in the valuation of assets. For this report, Prof. Dr. Martin Hellmich, a Deloitte partner responsible for the valuation of securities in the area of Audit & Assurance, works together with Prof. Dr. Rüdiger Kiesel, professor for Energy Trading and Finance at the University of Duisburg-Essen, on the identification of quantitative approaches and their extension, in order to take into account carbon risks in the valuation of assets. >more

Studies > Corporate Finance

PwC

CAPITAL MARKETS IN 2030: THE FUTURE OF EQUITY CAPITAL MARKETS

The four most popular stock exchanges that companies are considering for an Initial Public Offering (IPO) are the two New York stock exchanges (New York Stock Exchange and Nasdaq) in 1st and 3rd place, the London Stock Exchange in 2nd place and the Hong Kong Stock Exchange in 4th place. With the Indian stock exchanges (Bombay Stock Exchange and National Stock Exchange of India), a representative of the up-and-coming economic markets makes the leap into the top 5. Deutsche Börse is ranked 8th. With respect to IPOs in 2030, the top 5 remains unchanged - only Nasdaq and London Stock Exchange change places. >more

Studies > Performance

Deloitte

RESPONDING TO BREXIT IN THE FINANCIAL SERVICES INDUSTRY

The United Kingdom will leave the European Union (EU) and several credit institutions in 2019 and investment firms still need to finalise their Brexit-projects to establish a third country branch or subsidiary in the EU to be able to access the European Single Market after Brexit. This White Paper addresses typical regulatory differences and implementation challenges that need to be considered in the context of founding a new bank or investment firm in Germany. >more


Research Papers > Corporate Valuation

WACC AND CAPM ACCORDING TO UTILITIES REGULATORS: CONFUSIONS, ERRORS AND INCONSISTENCIES

Pablo Fernandez
2019
Regulators of many countries try to find the “true” WACC of Electricity, Gas, Water… activities. All their documents have in common a main confusion: they do not differentiate among expected, required, historical, and regulator allowed returns, which are 4 very different concepts. Most of the documents have several conceptual errors (they apply wrongly the CAPM and the WACC), several inconsistencies estimating parameters and multiply the WACC by the depreciated book value of assets. Another two common peculiarities of many regulators are a) their penchant for calculating averages and averages of averages, and b) their argument of doing strange calculations “because many other regulators do so.” We show how a European Regulator arrives to a “WACC before taxes of the electricity regulated activities” of 5,58%. We also show that using the same data and the same method, but criteria of other regulators for the calculation of the parameters you may justify any “WACC before taxes” in the interval 2,4% - 7,4%. >more

Research Papers >     M & A

EPS-SENSITIVITY AND MERGER DEALS

Sudipto Dasgupta, Jarrad Harford, and Fangyuan Ma
2019
Announcements of mergers where the target is offered stock very often discuss the impact of the deal on the acquirer’s earnings per share (EPS), especially when the deal is EPS-accretive for the acquirer. In this paper, we document that the acquirer’s EPS-sensitivity affects how deals are structured, the premium that is paid, and the types of deals that are done. We provide evidence that EPS-sensitivity of acquirers is another manifestation of short-termism, driven by institutional investor horizon as well as components of managerial compensation contracts. Our results suggest that the relative popularity of deals financed in cash since early 2000 could be a consequence of acquirers’ EPS-sensitivity and low value-multiple acquirers pursuing high value-multiple targets. EPS-sensitivity is also consistent with the overall pattern of “like-buys-like” that has been documented in the literature for stock deals. >more