NEWSLETTER of May 8, 2020

The following content has been added at finexpert:

EY

CORONA - AUSWIRKUNGEN AUF DIE DEUTSCHE VERSICHERUNGSINDUSTRIE

The publication "Corona: Effects on the German Insurance Industry" presents possible effects of the corona crisis on individual business areas of insurance companies. It also presents possible measures that can be taken to overcome the challenges. The corona crisis affects the entire value chain of insurance companies. A holistic view of the company and a structured coordination of all countermeasures are therefore of great importance. The CEO's agenda now includes short, medium and long-term measures. Companies that, in addition to effective crisis management, also master day-to-day business and long-term transformation can emerge stronger from the corona crisis. >more

Bank for International Settlements

COVID-19 AND CORPORATE SECTOR LIQUIDITY

The Covid-19 shock is placing enormous strains on corporates cash buffers. Corporate financial statements from 2019 suggest that 50% of firms do not have sufficient cash to cover total debt servicing costs over the coming year. Credit lines could provide firms with additional liquidity. On average undrawn credit stood around 120% of debt servicing costs at end 2019. However, access is uneven and banks may be reluctant to renew or extend them in the current environment. Sticky operating expenses result in many firms running operating losses, placing an additional burden on cash buffers. Estimates indicate that following a 10% drop in revenues, operating expenses only fall by 6% on average. >more

CMS Hasche Sigle / FINANCE

M&A PANEL APRIL 2020

For the FINANCE M&A Panel, the FINANCE editorial staff, together with the law firm CMS Hasche Sigle, interview M&A managers in companies and investment bankers anonymously three times a year about their current market assessment. In the evaluation they compile the most exciting statements on deal drivers, deal breakers and financing environment. As this edition shows, orders severly collapsed for M&A advisors due to the corona pandemic. >more

Neuberger Berman

PE INVESTING AT TURNING POINTS IN THE MARKET CYCLE

The spread of the coronavirus has upended the economic cycle and the long public equity bull market. Acknowledging that the length and depth of a crisis triggered by a new virus will likely be different from one triggered within the financial industry, it is worth reviewing how increases to private equity allocations historically performed when undertaken in and around the global financial crisis, as well as the earlier bursting of the technology bubble. Specifically, how did investors fare who increased their allocations to PE in relation to these events? >more

Credit Suisse

SUPERTRENDS PUSHING FOR CHANGE

Our normal way of life has ground to a halt because of the coronavirus disease (COVID-19) pandemic. This also holds true for the economy, as governments have shut down economies to contain the spread of COVID-19 and help their health systems cope with the sudden surge in critically ill patients. This crisis is challenging existing systems and structures, sowing the seeds for further change ahead as we uncover limitations in how we learn, work, and live. Going forward, citizens, businesses, and governments will need to reconsider the balance between the urban and the rural, between cost-consciousness and investing for the future, and between a remote and centralized workforce. >more

AT THE TABLE BUT CAN’T BREAK THROUGH THE GLASS CEILING: BOARD LEADERSHIP POSITIONS ELUDE DIVERSE DIRECTORS

Laura Casares Field, Matthew E. Souther, and Adam S. Yore
2019
We explore the labor market effects of gender and race by examining board leadership appointments. Prior studies are often limited by observing only hired candidates, whereas the boardroom provides a controlled setting where both hired and unhired candidates are observable. Although diverse (female and minority) board representation has increased, diverse directors are significantly less likely to serve in leadership positions, despite possessing stronger qualifications than non-diverse directors. While specialized skills such as prior leadership or finance experience increase the likelihood of appointment, that likelihood is reduced for diverse directors. Additional tests provide no evidence that diverse directors are less effective. >more

CEO-BOARD DYNAMICS

John R. Graham, Hyunseob Kim, and Mark T. Leary
2019
We examine CEO-board dynamics using a new panel dataset that spans 1920 to 2011. The long sample allows us to perform within-firm and within-CEO tests over a long horizon, many for the first time in the governance literature. Consistent with theories of bargaining or dynamic contracting, we find board independence increases at CEO turnover and falls with CEO tenure, with the decline stronger following superior performance. CEOs are also more likely to be appointed board chair as tenure increases, and we find evidence consistent with a substitution between board independence and chair duality. Other results suggest that these classes of models fail to capture important elements of board dynamics. >more