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NEWSLETTER of July 27, 2018

 

The following content has been added at finexpert:


Tutorials
QoD3

Question of doubt in corporate valuation QoD#3: Cost of capital of pension reserves (Bernhard Schwetzler)

In Germany firms are allowed to keep pension liabilities for their employees and pensioneers (and the corresponding assets) on their own books. For some big firms these liabilities make up a billions absolute amount and a significant fraction of the firm´s balance sheet. This video tackles the question of the cost of capital of this funding source. There are significant differences in the approaches to estimate these cost and the results they deliver. The video shows that these differences are due to different (implied) assumptions on the substitution of cash wage by the annual service cost of the pension liability. You may use the pension´s interest cost shown in the P&L only, if you assume that the service cost are 100% substituting cash wage. >more


Studies > M & A

PwC

M&A IN THE TRANSPORT AND LOGISTICS INDUSTRY: JANUARY–JUNE 2018

The M&A market started into 2018 with transactions worth 71.1 billion US dollars and 111 announced deals. Other features of this issue: China's e-commerce giants Alibaba and JD.com invest into own logistic processes and Ryanair benefits from a deal with Niki Lauda's airline Laudamotion. >more

Studies > Alternative Investments

Ernst & Young

PRIVATE EQUITY: DER TRANSAKTIONSMARKT IN DEUTSCHLAND H1 2018

Financial investors have been very active in Germany in the first half of 2018: The total volume of 10.7 billion euros is the highest value since the financial crisis. In the same period last year, the total volume was only 5.3 billion euros. At that time, there had not been a single deal worth more than one billion euros. Whereas this year recorded three of such deals already. >more

Studies > Performance

Oliver Wyman

IS EUROPE READY FOR THE NEXT CRISIS? OLIVER WYMAN RESTRUCTURING REPORT 2018

European economies have largely recovered from the debt crisis. Gross domestic product is growing by an average of 2.4 percent, and several factors speak for a sustained positive business climate for banks and companies. The mood among the companies surveyed for this year's restructuring study is thus very good. However, experience shows that severe crises are mainly triggered by unexpected events! This report discusses the possibility of a new crisis and how well the European banking sector is prepared for it. >more

Studies > Macro

World Economic Forum

THE GLOBAL FINANCIAL AND MONETARY SYSTEM IN 2030

The Global Future Council on Financial and Monetary Systems published this report singling out three key aspects of the risks and challenges associated with the two seemingly opposed forces of decentralization and integration, to which the international financial architecture will need to adapt: 1) regulatory challenges; 2) the transformation of the financial system through digitization; and 3) current macroeconomic risks. >more


Research Papers > Corporate Finance

BUSY BANKRUPTCY COURTS AND THE COST OF CREDIT

Karsten Müller
2018
How large are the welfare losses from inefficient legal enforcement? This paper studies the effect of judicial efficiency in the context of credit contracts in the United States. Using the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 as an exogenous shock to the caseload of bankruptcy courts, I show that debt enforcement is a quantitatively important factor for credit spreads and contract maturities. Consistent with higher expected recovery values for creditors, the effect is driven by firms with higher bankruptcy risk and lower expected liquidation values. The estimates imply a lower bound for the US-wide costs of bankruptcy court backlog of around $670 million per year and fiscal multipliers for new bankruptcy judges of above 100. This approach also uncovers the bankruptcy districts with the highest social returns on new judgeships. >more

Research Papers >     M & A

CEO HOME BIAS AND CORPORATE ACQUISITIONS

Kiseo Chung, T. Clifton Green, and Breno Schmidt
2018
CEOs are significantly more likely to purchase targets near their birth place, reflecting either beneficial informational advantages or inefficient managerial objectives. Evidence from bidder announcement returns supports the latter view. Acquirer returns are significantly lower for CEO home bias acquisitions, and the negative announcement effect is stronger when the target is located further away, among poorly-governed firms, and when the CEO has a deeper birth place connection. Home bias CEOs are more likely to purchase stock following merger announcements, which supports a familiarity bias interpretation over agency concerns. Our findings suggest that CEO home bias influences firm investment. >more