NEWSLETTER of November 27, 2020

The following content has been added at finexpert:

Amundi
FACTOR INVESTING AND ESG IN THE CORPORATE BOND MARKET BEFORE AND DURING THE COVID-19 CRISIS
The objective of this paper is to illustrate the factor investing space in corporate bonds before and during the COVID-19 crisis and is the natural extension of our prior analysis on both the new alternative credit factors and the ESG integration in credit. We use monthly credit excess return in the EUR denominated Investment Grade bond universe for regression analysis and factor picking. ESG was making its way to becoming a mainstream factor within the Investment Grade universe and when the COVID-19 stress hit the financial markets, it displayed a “hedge-like” behavior. We had previously identified that better ESG and lower cost of capital were related, however the realization of this feature in a stress environment is worth investors’ attention. >more

Deloitte
CFO SURVEY HERBST 2020
The Deloitte CFO Survey reflects the assessments and expectations of CFOs of major German companies on macroeconomic, corporate strategy and financial topics. The survey is published semi-annually and aims to identify trends and trend breaks. The current CFO Survey Fall 2020 examines, among other things, the business situation and strategies of German companies during the corona crisis and in a European comparison, as well as the trends in the German M&A market, which is picking up speed again in the third quarter. >more

Morgan Stanley
VENTURE CAPITAL AND RACIAL EQUALITY
Morgan Stanley’s second annual survey of venture capitalists reveals the intensified dialogue around racial inequality has captured investor attention and shifted their attitudes significantly. The increased focus on this issue is leading to investment strategies that include more actions to address disparities in funding for multicultural- and women-founded companies, which are well-documented for women and Black entreprenuers. >more

FTSE Russell
FEATURES AND TRENDS IN LISTED EUROPEAN REAL ESTATE
The European commercial real estate is estimated to represent some EUR 7.27 trillion of assets. While still small compared to the US and Asia, it has been undergoing significant changes in recent years. Studies show that when comparing the long-term returns of listed and unlisted real estate vehicles based on the same underlying assets, the listed sector is an effective proxy for direct property investment. However, listed real estate (LRE) has the benefit of higher transparency, diversification, unmatched liquidity and a lower hurdle to global access compared to direct property. In this paper, we discuss the recent trends and developments in the European LRE and compare features of LRE vs unlisted real estate investments. >more

PUBLIC THRIFT, PRIVATE PERKS: SIGNALING BOARD INDEPENDENCE WITH EXECUTIVE PAY
Pablo Ruiz-Verdú, and Ravi Singh
2020
We analyze how boards' reputational concerns influence executive compensation and the use of hidden pay. Independent boards reduce disclosed pay to signal their independence, but are more likely than manager-friendly boards to use hidden pay or to distort incentive contracts. Stronger reputational pressures lead to lower disclosed pay, weaker managerial incentives, and higher hidden pay, whereas greater transparency of executive compensation has the opposite effects. Although reputational concerns can induce boards to choose compensation contracts more favorable to shareholders, we show there is a threshold beyond which stronger reputational concerns harm shareholders. Similarly, excessive pay transparency can harm shareholders. >more

SEX, DRUGS, AND BITCOIN: HOW MUCH ILLEGAL ACTIVITY IS FINANCED THROUGH CRYPTOCURRENCIES?
Sean Foley, Jonathan R. Karlsen, and Tālis J. Putniņš
2018
Cryptocurrencies are among the largest unregulated markets in the world. We find that approximately one-quarter of bitcoin users are involved in illegal activity. We estimate that around $76 billion of illegal activity per year involves bitcoin (46% of bitcoin transactions), which is close to the scale of the US and European markets for illegal drugs. The illegal share of bitcoin activity declines with mainstream interest in bitcoin and with the emergence of more opaque cryptocurrencies. The techniques developed in this paper have applications in cryptocurrency surveillance. Our findings suggest that cryptocurrencies are transforming the black markets by enabling “black e-commerce.” >more