NEWSLETTER of May 26, 2023

The following content has been added at finexpert:

Allianz
GLOBAL INSURANCE REPORT 2023: ANCHOR IN TURBULENT TIMES
According to the Allianz Global Insurance Report 2023, total global insurance premium income amounted to almost EUR5.6trn in 2022. Life remains the largest segment (EUR2.6trn), ahead of p&c (EUR1.8trn) and health (EUR1.1trn). In 2022, the premium pool grew by EUR259bn or +4.9% – against the backdrop of a global inflation rate of 8.6%. The three segments, however, fared very differently: while p&c clocked robust growth of +8.7%, health expanded by more modest +4.9%, and life insurance market growth was a dismal +2.4%: squeezed real households’ incomes took the toll on private savings. >more

KfW Research
WAGNISKAPITAL FÜR NET ZERO: POTENZIALE UND HERAUSFORDERUNGEN
Climate-tech investments are on the rise in the VC market. This is the conclusion of a new study by KfW Research, which analyzes developments, potentials and challenges of climate tech on the German VC market. Climate tech plays an important role for the German VC market. In 2022, more than EUR 1.5 billion was invested in 118 financing rounds in Germany. The significant growth in climate-tech investments in the German VC market, was greater than investments in the rest of the market. However, due to the size of the VC market in the U.S., there is significantly more funding available per startup. A survey of German VC investors makes it clear that high growth opportunities arise primarily due to the expected increase in demand from market players. On the other hand, a high technological risk and the high financing requirements pose a particular challenge for investors in the climate tech sector. >more

Bain & Company
IS STRATEGIC M&A FINALLY CATCHING ON IN PRIVATE CAPITAL?
Consider an industry with more than 15,000 firms in which scale can be a clear advantage. Sounds like a fertile field for consolidation, right? Not if the industry happens to be private capital. For much of the industry’s history, consolidation has largely been a nonstarter. Firms have tried over time to expand geographically or add an asset class through M&A. But very often, mergers have foundered on the many levels of integration complexity that arise when private partnerships try to combine. >more

KfW Research
GERMAN VENTURE CAPITAL BAROMETER Q1 2023
The business climate in the German venture capital market improved slightly in the first quarter of 2023. The business climate indicator for the early-stage segment increased by 7.6 points to -34.9 balance points. Following the sharp drop in sentiment in the final quarter of 2022, however, the business climate thus remains at a very low level. The insolvency of Silicon Valley Bank weighed on the recovery in sentiment. >more

DO INSIDERS HIRE CEOS WITH HIGH MANAGERIAL TALENT?
Jason D. Kotter, and Yelena Larkin
2023
We examine the effect of the composition of the board of directors on the firm’s CEO hiring decision. Using a novel measure of managerial talent, characterized by an individual’s ascent in the corporate hierarchy, we show that firms with non-CEO inside directors tend to hire CEOs with greater managerial skills. This effect obtains for both internal and external CEO hires; moreover, the effect is pronounced when inside directors have stronger reputational incentives and limited access to soft information about the candidate. Our findings demonstrate that boards with inside directors more effectively screen for managerial talent, thereby improving the CEO hiring process. >more

A NEW WOLF IN TOWN? PUMP-AND-DUMP MANIPULATION IN CRYPTOCURRENCY MARKETS
Anirudh Dhawan, and Tālis J. Putniņš
2022
We investigate the puzzle of widespread participation in cryptocurrency pump-and-dump manipulation schemes. Unlike stock market manipulators, cryptocurrency manipulators openly declare their intentions to pump specific coins, rather than trying to deceive investors. Puzzlingly, people join in despite negative expected returns. In a simple framework, we demonstrate how overconfidence and gambling preferences can explain participation in these schemes. Analyzing a sample of 355 cases in six months, we find strong empirical support for both mechanisms. Pumps generate extreme price distortions of 65% on average, abnormal trading volumes in the millions of dollars, and large wealth transfers between participants. >more