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NEWSLETTER of November 30, 2018

 

The following content has been added at finexpert:


Studies > M & A

Accenture

M&A: FROM ART TO SCIENCE

New Accenture Strategy research shows large companies in the U.S. are now pursuing more mergers and acquisitions to gain digital capabilities. With digital fueling new business growth, they are supplementing their organic digital growth with inorganic deals. The true victors in M&A will be those who apply digital technologies to their own processes, giving them a competitive advantage from strategy to playbook, for both digital and traditional deals. >more

Studies > Alternative Investments

AssetMetrix

APPROACHES, CHARACTERISTICS AND IMPLICATIONS OF PRIVATE EQUITY INDICES

Due to private equity’s inherent non-public nature, performance measurement for the sector poses special challenges. Prior to any further calculation and deeper analysis, a suitable basis for making statements about value development over time has to be chosen. This places us directly into the realm of index construction. In the course of this paper, AssetMetrix explores different possibilities of implementing private equity indices. >more

Studies > Alternative Investments

McKinsey & Company

FULL SPEED AHEAD IN EUROPEAN ASSET MANAGEMENT

Europe’s asset-management industry enjoyed its ninth consecutive year of record performance in 2017: assets under management (AUM) rose by 8 percent, to €22.5 trillion, one of the best showings since the financial crisis. The global industry reached new highs as well, powered by strong performance in many of the world’s stock markets. >more

Studies > Risk Management

Ernst & Young

ACCELERATING DIGITAL TRANSFORMATION - FOUR IMPERATIVE FOR RISK MANAGEMENT

The technology revolution demands that every bank reinvent itself, and risk management has a critical role to play in this transformation. This is the core finding in our latest bank risk management survey, Accelerating digital transformation: four imperatives for risk management, a collaborative effort between EY and the Institute of International Finance. >more


Research Papers > Corporate Finance

CREDIT DEFAULT SWAPS AROUND THE WORLD: INVESTMENT AND FINANCING EFFECTS

Söhnke M. Bartram, Jennifer S. Conrad, Jongsub Lee, and Marti G. Subrahmanyam
2018
We analyze the impact of the introduction of credit default swaps (CDS) on real decision making within the firm, taking into consideration differences in firms’ local economic and legal environments. We extend the model of Bolton and Oehmke (2011) to take into account uncertainty whether the actions taken by the reference entity will trigger credit events for the CDS obligations. We test the predictions of the model in a sample of more than 56,000 firms across 50 countries over the period 2001–2015 and find substantial evidence that the introduction of CDS affects real decisions within the firm, including those regarding leverage, investment, and the riskiness of the firm’s investments. Importantly, we find that the legal and market environments in which the reference entity operates have an influence on the impact of CDS. The effect of CDS is larger in environments where uncertainty regarding CDS obligations is reduced and where CDS mitigate weak property rights. Our results shed light on the incomplete nature of CDS contracts in international capital markets, related to significant legal uncertainty surrounding the interpretation of underlying credit events. >more

Research Papers  > Alternative Investments

PRIVATE EQUITY INDICES BASED ON SECONDARY MARKET TRANSACTIONS

Brian H. Boyer, Taylor Nadauld, Keith Vorkink, and Michael S. Weisbach
2018
Measuring the performance of private equity investments (buyout and venture) has historically only been possible over long horizons because the IRR on a fund is only observable following the fund’s final distribution. We propose a new approach to evaluating performance using actual prices paid for limited partner shares of funds in secondary markets. We construct indices of buyout and venture capital performance using a proprietary database of secondary market prices between 2006 and 2017. These transaction-based indices exhibit significantly higher betas and volatilities, and lower alphas than NAV-based indices built from Preqin and obtained from Burgiss. There are a number of potential uses for these indices. In particular, they provide a way to track the returns of the buyout and venture capital sectors on a quarter-to-quarter basis and to value illiquid stakes in funds. >more