NEWSLETTER of February 21, 2025

The following content has been added at finexpert:

European Investment Bank
EIB INVESTMENT SURVEY 2024: GERMANY OVERVIEW
This unique insight into the corporate investment in Germany examines companies' finance needs and the constraints they face. The 2024 edition also provides insight into the pressing issues facing firms, such as climate change, high energy costs and the green transition. The survey, which has been administered since 2016, covers about 13 000 firms across the European Union, including a small sample of US firms. >more

KPMG
VENTURE PULSE Q4'24
VC investment in Europe rose in Q4’24, although the total investment in the region for 2024 fell short of 2023 results, highlighting the significant challenges experienced in the VC space over the last twelve months. The number of VC deals remained very low in Q4’24 as investors placed more capital in a much smaller number of proven, high-quality companies. The UK attracted the largest share of VC investment in the region during Q4’24 helped by a $1.3 billion raise by AI-enabler data platform company GreenScale. The UK also attracted the most investment during 2024 as a whole, followed by France and then Germany. >more

Institut der Deutschen Wirtschaft
ERBSCHAFT- UND  VERMÖGENSTEUER IN DEN WAHLPROGRAMMEN
Even though the wealth tax has not been levied in Germany for almost 30 years, the programs for the Bundestag elections contain approaches for a revival. Alliance 90/The Greens, the SPD, the Left Party and the BSW are in favor of taxing assets worth millions. The thrust is different. The Left Party and BSW want to start with assets in the single or double-digit million range, while the SPD is targeting assets of €100 million or more and the Greens are aiming for billionaires. >more

Kiel Institut für Weltwirtschaft (IfW Kiel)
GREIX Q4 2024 – PREISAUFSCHWUNG VERLANGSAMT SICH – MEHR AKTIVITÄT AUF DEM IMMOBILIENMARKT
The price recovery for residential properties is losing momentum at the end of 2024. Prices for condominiums are stagnating, while single and multi-family homes are slightly more expensive compared to the previous quarter (Q3 2024). Market momentum is increasing, as can be seen from the growing number of transactions. These findings are based on the latest update of the German Real Estate Index (GREIX), a joint project of the expert committees for property values, ECONtribute and the Kiel Institute for the World Economy (IfW Kiel). >more

Allianz Research
GLOBAL PENSION REPORT 2025: TIME TO WALK THE TALK
Allianz published the third edition of its “Global Pension Report”, which analyzes 71 pension systems around the globe with the help of the company's own “Allianz Pension Index” (API). The indicator consists of three pillars: analysis of the demographic and fiscal situation, and an assessment of the sustainability (e.g. financing and contribution periods) and adequacy (e.g. coverage and pension levels) of the pension system. A total of 40 parameters are taken into account, with scores between 1 (no need for reform) and 7 (acute need for reform). The weighted sum of all parameters reflects the pressure for reform in the respective system. >more

FINANCIAL ADVICE AND INVESTOR BELIEFS: EXPERIMENTAL EVIDENCE ON ACTIVE VS. PASSIVE STRATEGIES
Antoinette Schoar, and Yang Sun
2024
Using a randomized controlled trial we test how retail investors assess and update their priors based on different types of financial advice, which either aligns with their priors or goes against it. We compare advice that emphasizes either the benefits of passive investment strategies (such as diversification and low fees) or active strategies (such as stock picking and market timing). We find that participants rate advice significantly higher when it aligns with their priors rather than contradicts them. But people update their beliefs about investment strategies in the direction of the advice they receive, independent of their priors. At the same time, there is significant heterogeneity based on the subjects' financial literacy. Financially more literate subjects positively update in response to seeing passive advice, but most do not update (and rate the advice negatively) when exposed to active advice. In contrast, financially less literate subjects are strongly influenced by both types of advice. Finally, we show that subjects rate the advice lower if the advisor is perceived to have misaligned incentives (the advisor in the video mentions receiving commission-based pay) compared to when it is more aligned (advisor receives flat fee). >more

DARK AND BRIGHT SIDES OF RIGHTS OFFERS
Massimo Massa, Virginie Mataigne, and Theo Vermaelen
2024
This paper studies the true nature of rights issues and the governance role blockholders might have. On the one hand, rights issues provide the positive effect of avoiding to issue undervalued stock to outside investors as is the case in cash offers. On the other hand, they can be viewed as “coercive” devices in the absence of a liquid market for selling the rights or, even worse in the case of non-tradability of the rights. While investors can avoid coercion by selling their shares before the ex-rights date, such a strategy will be complicated for large investors, i.e. blockholders. Using a unique sample of 37,767 equity issuances around the world, we document that, in the presence of blockholders firms are less likely to resort to rights offers. Conditional on doing the rights offer, the presence of blockholders is related to higher value creation, suggesting that the money raised through the rights offer is less likely to be wasted in negative NPV projects. Also, the presence of blockholders reduces the willingness of the firm to restrict the tradability of the rights. Finally, we show that blockholders ensure good corporate governance, especially in the absence of legal provisions. >more