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NEWSLETTER of January 25, 2019

 

The following content has been added at finexpert:


Studies > Performance

Deutsche Bank Research

EUROPEAN BANKS: OPERATING STRUGGLES AND SOME EXTERNAL HEADWINDS

Banks in Europe face a more difficult business environment in 2019 than last year. While the macro environment is still decent, momentum is cooling markedly. In addition, prominent political risks loom dangerously. On the operating side, banks are treading water. Their limited cost savings are being fully absorbed by declining revenues, and balance sheets continue to shrink despite a moderate pickup in lending. Profitability and capital levels are both stagnating. Only in a benign economic and political scenario will banks be able to return to growth this year. >more

Studies > Performance

PGIM

THE TRADEOFF BETWEEN LIQUIDITY AND PERFORMANCE: PRIVATE ASSETS IN INSTITUTIONAL PORTFOLIOS

Are investors sacrificing too much portfolio performance in the name of liquidity? Investors may wish to increase allocation to private assets with their potentially greater returns and diversification benefits, but worry that these assets are too illiquid to generate sufficient cash when needed. How can investors measure the tradeoff between liquidity and performance to determine their optimal mix of private and public assets? PGIM’s IAS team presents an asset allocation framework that investors can use as a tool to answer this question. >more

Studies > Alternative Investments

Debevoise & Plimpton

2018/2019 PRIVATE EQUITY YEAR END REVIEW AND OUTLOOK

Private equity made another strong showing in 2018, limited only by the fierce competition for deals. To find opportunities while maintaining discipline, funds have gotten creative—through roll-up and add-on strategies, in the financing arrangements they offer acquisition targets, and in increased interest in new markets, such as impact investing. >more

Studies > Macro

World Economic Forum

THE GLOBAL RISKS REPORT 2019

The report presents the results of our latest Global Risks Perception Survey, in which nearly 1,000 decision-makers from the public sector, private sector, academia and civil society assess the risks facing the world. Nine out of 10 respondents expect worsening economic and political confrontations between major powers this year. Over a ten-year horizon, extreme weather and climate-change policy failures are seen as the gravest threats. >more


Research Papers > Corporate Valuation

CAPM-BASED COMPANY (MIS)VALUATIONS

Olivier Dessaint, Jacques Olivier, Clemens A. Otto, and David Thesmar
2018
There is a discrepancy between CAPM-implied and realized returns. Using the CAPM in capital budgeting - as recommended in finance textbooks - should thus have valuation effects. For instance, low beta projects should be valued more by CAPM-using managers than by the market. This paper empirically tests this hypothesis using publicly announced M&A decisions and shows that takeovers of lower beta targets are accompanied by lower cumulative abnormal returns for the bidders. Specifically, our estimates imply an average net loss to bidders corresponding to 12% of the average deal value and exceeding USD 10 billion per year in aggregate. >more

Research Papers >     M & A

WHAT DRIVES THE TAKEOVER PROCESS? NEW EVIDENCE FROM THE INNER WORKINGS OF INTERNAL M&A TEAMS

Nihat Aktas, Audra L. Boone, Alexander Witkowski, Guosong Xu, and B. Burcin Yurtoglu
2018
This paper provides insights into the inner workings of internal corporate merger and acquisition teams using survey evidence from 65 firms from Austria, Germany and Switzerland. The responses indicate the growing reliance on a firm’s own employees for implementing takeover strategies. Firms are proactive in deal initiation, such that they rely more on their internal analysis to generate investment ideas and less on investment banks. Deals negotiated by CEOs are on average of better quality in terms of announcement returns. Moreover, M&A team factors can explain approximately 45% of the acquirer fixed effects in announcement return regressions. >more