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NEWSLETTER of November 29, 2019

 

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Studies > Performance

Deutsche Bank Research

PRIVATE HOUSEHOLDS IN GERMANY: REGIONAL DIFFERENCES IN BANKING

In the lending and deposit-taking business with retail customers, there are substantial differences between the federal states. 30 years after the fall of the Berlin Wall, per capita loan volumes in east Germany are significantly lower than in the west. The latter, in turn, is characterised by a certain north-south divide. Savings banks have a market share of 25-35% throughout the country, whereas cooperative banks have a much stronger presence in the south and west than in the east and north. The large banks achieve an above-average market share of 20-25% in the city states and east Germany. The spread between the federal states is smaller for deposit volumes than for credit volumes. Primarily the savings banks, cooperative banks and other commercial banks have to cope with a considerable deposit overhang and thus an "investment plight" in the negative interest rate environment. >more

Studies > Corporate Finance

PwC

GLOBAL CRISIS SURVEY 2019

Six out of ten German companies have been affected by a crisis in the past five years. However, the majority do not have a plan to prevent corporate crises. Only four out of ten companies have a crisis team with defined roles and responsibilities. These are the findings of PwC's Global Crisis Survey 2019, the largest compilation of corporate crisis data ever produced. For the study, PwC surveyed around 2,000 executives from 25 industries in 43 countries, including around 100 executives from Germany. A total of over 4,500 crisis situations were analysed globally. >more

Studies > M & A

Bain & Company

THE NEW AGE OF SCALE, SCOPE AND INFRASTRUCTURE IN TELECOM M&A

Lack of growth prospects and high investment requirements put many telecommunications companies under pressure. In most regions, the telecommunications markets are saturated. Even in developing countries, the growth potential is only slight. Mature markets such as Europe have long been characterized by intense price competition and initial consolidation. In order to retain their customers, companies must invest in 5G and next-generation fiber optic networks. At the same time, investors want to see more revenue and profitability. >more

Studies > Accounting

Kirchhoff / BDO

NACHHALTIG GUT BERICHTEN

Over the past decade, the pursuit of a balance between economic, ecological and social interests has increasingly developed from a niche existence to an integral part of entrepreneurial activity. Accordingly, the publication of information about their own sustainability performance has become a matter of course for many companies and is regarded as reputation-promoting communication. The significantly increasing expectation pressure from customers, investors, employees and other stakeholders is prompting companies to report on the economic, ecological and social effects of their business activities. The 160 DAX companies do this to varying degrees in terms of scope, quality and transparency, as this report documents. >more


Research Papers > Corporate Finance

THE DIFFERENTIAL IMPACT OF LEVERAGE ON THE DEFAULT RISK OF SMALL AND LARGE FIRMS

Lara Cathcart, Alfonso Dufour, Ludovico Rossi, and Simone Varotto
2019
We analyse a sample of 6 million firm-year observations of large corporations and small and medium sized enterprises (SMEs) spanning 6 European countries from 2005 to 2015, to determine the impact of leverage and different sources of funding on default risk. We find that financial leverage has a greater impact on the probability of default of SMEs than of large corporations. The difference in default probability between the top and bottom leverage quartiles is 1.24% for large firms and 2.87% for SMEs. This difference may be explained by the greater exposure of SMEs to short-term debt and their consequently higher refinancing risk. Indeed, we find that SMEs that recover from the state of insolvency may have similar leverage to defaulted SMEs; however their liability structure is significantly altered towards long-term debt and away from short-term debt. Our findings have important implications not only for bank regulators and policy-makers but also for credit risk modelling. >more

Research Papers >     M & A

POST-ACQUISITION PERFORMANCE OF PRIVATE ACQUIRERS

Andrey Golubov, and Nan Xiong
2019
We provide the first evidence on the performance of private operating firms as acquirers. Private bidders experience greater post-acquisition operating performance improvements compared to public bidders. This effect is not due to differences in target types, merger accounting, financing constraints, private equity ownership or subsequent listing of some private bidders, and is robust to instrumentation. Further analysis of governance arrangements at least partially attributes the private bidder effect to lower agency costs in private firms. Not only do private firms pay lower prices for target firm assets, they also operate them more efficiently by containing overhead costs and capital expenditures. >more