NEWSLETTER of August 27, 2021

The following content has been added at finexpert:

BlackRock
A DYNAMIC RESTART: 2021 MIDYEAR GLOBAL CREDIT OUTLOOK
Credit performance was mixed in the first half against a backdrop of accelerating growth and strong monetary and fiscal support for the economy. We remain constructive, with a watchful eye on inflation trends and a focus on selectivity, embracing complexity and global opportunities. >more

PGIM
THE INVESTMENT IMLPICATIONS OF COVID-INDUCED DEBT OVERHANG
A large debt overhang is one of the most salient economic legacies of the COVID pandemic, as some emerging and frontier economies could face distress servicing their debt. In this piece, we present a parsimonious analytical framework aimed at spotting the discrepancies among emerging and frontier markets in their ability to weather the risks of COVID-induced debt overhang. We then leverage the framework to identify investment opportunities. >more

Strategy&
PROFITABLE GROWTH IN COMMERCIAL INSURANCE
Strategy& - The commercial insurance business in Germany faces competition from all sides. Traditional private insurers, keen to grab a slice of the commercial market, are upselling policies to their existing customers. On the other end of the spectrum, traditional industrial insurers follow a similar strategy. Incumbents also face competition from industry outsiders, such as large industrial brokers, and advances in automation and technology give rise to completely new entrants. >more

Alvarez & Marsal
DIE STILLE LIQUIDATION ALS PROBATES INSTRUMENT ZUR RESTRUKTURIERUNG
The negative economic effects of the Corona pandemic have left visible consequences and led to the collapse of supply chains and entire industries. As a result, companies must continuously question their goals and adjust them accordingly. In recent months, company owners and management have repeatedly re-evaluated the performance of sites, factories and products. The sometimes surprising realization is that there are many problem areas that are eating up a significant portion of the profits of other parts of the business. The credo is fix, sell or close! >more

KfW Research
GERMAN VENTURE CAPITAL BAROMETER - Q2 2021
The upturn in sentiment on the German venture capital market continues in Q2 2021. The business climate indicator of the early-stage segment rises by 10.5 points to 37.8 balance points, marking a new record. The development of climate components on fundraising, exit opportunities and deal flow strength have fueled the business climate. All three indicators have set new records. In terms of exit opportunities, the IPO climate has picked up the most, reflecting the currently well-filled IPO calendar. >more

CREDIT DEFAULT SWAPS AROUND THE WORLD
Söhnke M. Bartram, Jennifer S. Conrad, Jongsub Lee, and Marti G. Subrahmanyam
2020
We analyze the impact of the introduction of credit default swaps (CDS) on real decision making within the firm and the influence of firms’ local economic and legal environments on that impact. We extend the model of Bolton and Oehmke (2011) to take into account uncertainty about whether the actions taken by the reference entity will trigger credit events for CDS obligations. We test the predictions of our model in a sample of more than 56,000 firms across 51 countries over the period 2001–2015 and find substantial evidence that the introduction of CDS affects real decisions. Importantly, we find that the legal and market environments in which reference entities operate 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 weak property rights are mitigated by CDS. Our results shed light on the incomplete nature of CDS contracts in international capital markets, which is related to significant legal uncertainty surrounding the interpretation of underlying credit events. >more

DO FIRMS WITH SPECIALIZED M&A STAFF MAKE BETTER ACQUISITIONS?
Sinan Gokkaya, Xi Liu, and René M. Stulz
2021
We open the black box of the M&A decision process by constructing a comprehensive sample of US firms with specialized M&A staff. We investigate whether specialized M&A staff improves acquisition performance or facilitates managerial empire building instead. We find that firms with specialized M&A staff make better acquisitions when acquisition performance is measured by stock price reactions to announcements, long-run stock returns, operating performance, divestitures, and analyst earnings forecasts. This effect does not hold when the CEO is powerful, overconfident, or entrenched. Acquisitions by firms without specialized staff do not create value, on average. We provide evidence on mechanisms through which specialized M&A staff improves acquisition performance. For identification, we use the staggered recognition of inevitable disclosure doctrine as a source of exogenous variation in the employment of specialized M&A staff. >more