NEWSLETTER of July 1, 2022

The following content has been added at finexpert:

KfW Research
DREI VIERTEL DER KMU SEHEN MANGEL AN NACHFOLGERINNEN UND NACHFOLGERN ALS PROBLEM – GEFAHR UNFREIWILLIGER STILLLEGUNGEN
The generational change in SMEs is progressing. By the end of 2025, 16 % of small and medium-sized enterprises (SMEs) are aiming for a succession solution. But the hurdles are high, as a special analysis of the KfW SME Panel shows: Three quarters of all SMEs consider it a problem to find a suitable successor. Just under 40 % of SMEs see agreeing on a purchase price as a major hurdle. Among the approximately 600,000 SMEs aiming for succession by the end of 2025, around 165,000 face involuntary closure or at least a significant delay. The activation and support of potential takeover founders is crucial to the success of business succession in SMEs. >more

Deloitte
RISIKEN FÜR DIE KONJUNKTUR, LIEFERKETTEN UNTER DRUCK: DELOITTE CFO SURVEY FRÜHJAHR 2022
The Deloitte CFO Survey reflects the assessments and expectations of CFOs of large German companies on macroeconomic, corporate strategy and financial topics. The survey is published semi-annually and aims to identify trends and trend breaks. The results of the new edition in spring 2022 are strongly influenced by the economic impact of the war in Ukraine: The initially positive economic starting position at the beginning of the year was completely changed as a result. Currently, economic risks and supply chain problems dominate the picture from the CFOs' perspective. >more

Bank for International Settlements
MINERS AS INTERMEDIARIES: EXTRACTABLE VALUE AND MARKET MANIPULATION IN CRYPTO AND DEFI
Cryptocurrencies such as Ethereum and decentralised finance (DeFi) protocols built on them rely on validators or "miners" as intermediaries to verify transactions and update the ledger. Since these intermediaries can choose which transactions they add to the ledger and in which order, they can engage in activities that would be illegal in traditional markets such as front-running and sandwich trades. The resulting profit is termed "miner extractable value" (MEV). MEV is an intrinsic shortcoming of pseudo-anonymous blockchains. Addressing this form of market manipulation may call for new regulatory approaches to this new class of intermediaries. >more

European Investment Bank
HOW BAD IS THE UKRAINE WAR FOR THE EUROPEAN RECOVERY?
Before the war, the European economy was experiencing a heady recovery. The one-two punch of higher energy prices and trade disruptions, however, could destabilise EU firms already weakened by the pandemic, according to a new report published by the European Investment Bank. Simulations by the European Investment Bank find that the share of EU firms losing in money could rise, particularly among businesses hit by lower exports to Ukraine, Russia and Belarus and those exposed to higher energy prices. At the same time, rising inflation could push more Europeans under the poverty line. >more

Bank for International Settlements
BIS QUARTERLY REVIEW: JUNE 2022
The BIS Quarterly Review examines developments in international banking and financial markets. Published in March, June, September and December, it comprises a review of market developments over the past quarter, and special features that analyse topical economic and financial issues. The June 2022 Quarterly Review analyses how geography, regulation and taxation set cross-border financial centres apart and propelled their rise. >more

CEO SELECTION AND EXECUTIVE APPEARANCE
Douglas O. Cook, and Shawn Mobbs
2019
We use a scientifically-based measure of executive facial attractiveness that is correlated with survey assessments, but not as noisy, and find a positive link between attractiveness and CEO selection. We find evidence that better interpersonal relationships is one mechanism through which CEO attractiveness is valuable. Attractive CEOs inform directors more effectively and are more quickly appointed as board chair. We also find that more attractive executives receive higher compensation relative to their peers and that attractiveness is more valuable when executives are otherwise more similarly skilled. Finally, more attractive executives are associated with higher abnormal stock returns around their CEO selection announcement. Overall, facial attractiveness is an important executive trait with significant labor market implications. >more

RELATIVE VERSUS ABSOLUTE PERFORMANCE EVALUATION AND CEO DECISION-MAKING
Karen H. Wruck, and YiLin Wu
2021
We provide new evidence on how performance-based compensation plans affect CEO decision-making, especially risk-taking. Our main finding is that relative performance evaluation (RPE) plans provide incentives for CEOs to make decisions that generate more idiosyncratic performance outcomes; absolute performance evaluation (APE) plans do not. After switches from APE to RPE, the correlation between firm stock return and industry index return falls and firm idiosyncratic risk increases. Further, switches to RPE are followed by larger deviations in financial, investment, and operating policies from industry norms (i.e., more idiosyncratic strategies). All results are opposite for switches to APE. >more