NEWSLETTER of April 17, 2020

The following content has been added at finexpert:

45-Minutes-Free-Webinar: "Unternehmensbewertung und COVID-19: Wie sind Insolvenzwahrscheinlichkeiten und ereignisbedingte Zahlungen zu berücksichtigen?" 29.04.2020 18.00-18.45 Uhr

The coronavirus - representative of any extreme event - and the associated economic effects not only have an obvious dramatic impact on company values; they will also have a lasting effect on the methods of company valuation. The considerably increased probability of insolvency must be integrated sensibly and consistently into the valuation calculation. Cash flow distributions and special effects must be adequately modelled. This 45-minute webinar discusses requirements for the inclusion of the described influencing factors and presents some simple and sophisticated ways to take them into account in the valuation calculation. The webinar provides an opportunity for questions and discussion. Discussion partners: Prof. Dr. Bernhard Schwetzler and Dr. Maximilian Schreiter >more

Bain & Company

COVID-19: STRESSTEST FÜR DIE GESETZLICHEN KRANKENVERSICHERUNGEN

In the face of the coronavirus epidemic, healthcare systems worldwide are under more pressure than ever before. In the view of Bain's macro-trend specialists, the impact of the novel coronavirus has now reached level 6 on a ten-level Situational Threat Report Index (SITREP). But how does the current situation affect benefit expenditure and the management of health insurance funds in Germany? >more

Allen & Overy

COVID-19 CORONAVIRUS: CONFRONTING THE UNKNOWN

The Covid-19 coronavirus pandemic is bringing the global transactions market to a near standstill with a sharp slowdown in dealmaking likely to persist until the public health crisis is brought under control. Even then, the market, and the motivations of investors, may look very different. >more

Deloitte

FINANZINSTRUMENTE UND COVID-19: AUSWIRKUNGEN AUF DIE BERICHTERSTATTUNG VON FINANZINSTRUMENTEN

The consideration of the consequences of COVID-19 when calculating expected credit losses according to IFRS 9 affects almost all companies. The scope of application is wide and includes not only all financial assets that are measured at amortised cost (e.g. trade receivables) or at fair value through equity (e.g. bonds), but also leasing receivables under IFRS 16, active contract items under IFRS 15 and loan commitments and financial guarantees that are not measured at fair value through profit or loss. >more

KfW Research

KFW-INTERNATIONALISIERUNGSBERICHT

The coronavirus hits the export-oriented German economy in an already difficult situation. The increasing tensions in international trade relations and a slowing global economy already left their mark on SMEs in 2018: foreign sales at that time rose by only around 3.1 % to EUR 595 billion (2017: 5.5 %).The foreign share of total sales of internationally active companies fell slightly to 28.2 % in 2018. The KfW-ifo export expectations of SMEs in the manufacturing sector were negative throughout 2019, but recently they have dropped sharply again: In March 2020 the indicator fell by a full 17.6 points to a balance of -24.6. >more

VALUATION AND LONG-TERM GROWTH EXPECTATIONS

Angel Tengulov, Josef Zechner, and Jeffrey Zwiebel
2019
A standard DCF corporate valuation usually includes a terminal value based on a long-term growth rate to reflect value from beyond the typical forecasting horizon of three to seven years. Despite often having a dominant effect on overall firm value, both the academic literature and practitioner conventions provide very little guidance on how this long-term growth rate should be determined. This paper addresses this gap: we undertake an exploratory analysis of how firms’ long-term growth is related to various firm and industry characteristics. We apply an extensive selection of potential predictors based on firm, industry, and market characteristics, in order to explain the variation in firms’ long-term growth rates. As such, we provide a predicted long-term growth rate for all firms, which can then be used as an input into a DCF valuation. >more

WHEN FINTECH COMPETES FOR PAYMENT FLOWS

Christine A. Parlour, Uday Rajan, and Haoxiang Zhu
2020
We study the impact of FinTech competition in payment services when banks rely on consumers' payment data to obtain information about their credit quality. Competition from FinTech payment providers disrupts this information spillover, reducing the bank's loan quality and profit. FinTech competition benefits consumers with weak bank affinity (financial inclusion improves), but may hurt consumers with strong bank affinity. We consider three regimes in which payment information flows back into the credit market: FinTech lending, data sales, and consumer data portability. All three regimes improve the quality of loans, although their effects for bank profit and consumer welfare are ambiguous. Our results highlight the important and complex trade-off between consumer welfare and the stability of banks following FinTech competition in payment. >more