NEWSLETTER of January 24, 2020

The following content has been added at finexpert:

MSCI

WOMEN ON BOARDS: 2019 PROGRESS REPORT

Our annual update on women’s representation on corporate boards found a noticeable uptick in 2019: 20.0% of directors were women, up from 17.9% in 2018 and 17.3% in 2017. At the current pace, a 50/50 gender split among global directors might be reached by 2044. We have added other areas of interest including market- and sector-specific corporate gender diversity issues, expertise comparison and an overview of regulatory frameworks around gender diversity. >more

Bain & Company

2020 GLOBAL CORPORATE M&A REPORT

Worries about the global economy and a potential downturn dominated executive discussions in 2019. There were major geopolitical issues to deal with, too, headlined by the chaotic path to Brexit and US-China trade tensions. Executives also grappled with rising regulator intervention in dealmaking that dampened spirits, most notably in Europe. While it has never been easy being an M&A decision maker, the past year introduced multiple layers of unease. >more

PwC

DESTINATION DEUTSCHLAND. M&A-AKTIVITÄTEN AUSLÄNDISCHER INVESTOREN 2019

International investors saw attractive takeover or investment targets in German companies in 2019. U.S. companies in particular participated more frequently in company acquisitions in Germany than in the previous year, and the proportion of private equity investments in deals has reached a new high. These are the findings of the study "Destination Germany. M&A activities of foreign investors 2019" by the auditing and consulting firm PricewaterhouseCoopers. The analysis covers all transactions announced between 1 January 2016 and 15 November 2019. >more

J.P. Morgan

Q1 2020 GUIDE TO THE MARKETS: EUROPE

Updated each quarter, the Guide to the Markets illustrates a comprehensive array of market and economic trends and statistics for Europe. This includes information about equities, fixed income and other asset classes as well as macroeconomic analyses. >more

RISK MANAGEMENT, FIRM REPUTATION, AND THE IMPACT OF SUCCESSFUL CYBERATTACKS ON TARGET FIRMS

Shinichi Kamiya, Jun-Koo Kang, Jungmin Kim, Andreas Milidonis, and René M. Stulz
2019
We develop a model where a firm has an optimal exposure to cyber risk. With rational, fully informed agents and with no hysteresis, a successful cyberattack should have no impact on a financially unconstrained target’s reputation and post-attack policies. In contrast, when a successful attack involves the loss of personal financial information, there is a significant shareholder wealth loss, which is much larger than the attack’s out-of-pocket costs. This excess loss is higher when the attack decreases sales growth more and lower when the board pays more attention to risk management before the attack. Further, an attack decreases a firm’s risk appetite as it beefs up its risk management and information technology and decreases the risk-taking incentives of management. Finally, successful cyberattacks adversely affect the stock price of firms in the target’s industry. These results imply that successful attacks with personal financial information loss provide adverse information about cyber risk to target firms, their stakeholders, and their competitors. >more

SHORT-TERM DEBT AND INCENTIVES FOR RISK-TAKING

Marco Della Seta, Erwan Morellec, and Francesca Zucchi
2019
We challenge the view that short-term debt curbs moral hazard and analytically demonstrate that, in a world with financing frictions and fair debt pricing, short-term debt increases incentives for risk-taking. To do so, we develop a model in which firms are financed with equity and short-term debt and cannot freely optimize their default decision because of financing frictions. Using this model, we show that short-term debt can give rise to a "rollover trap," a scenario in which firms burn revenues and cash reserves to absorb severe rollover losses. In the rollover trap, shareholders find it optimal to increase asset risk in an attempt to improve interim debt repricing and prevent inefficient liquidation. These risk-taking incentives do not arise when debt maturity is sufficiently long. >more