NEWSLETTER of October 13, 2023

The following content has been added at finexpert:

KfW Research
VIELFÄLTIGE HEMMNISSE BREMSEN KLIMASCHUTZINVESTITIONEN IM MITTELSTAND
German SMEs are already active in the area of climate protection: more than half of them are planning to invest in climate protection in the next three to five years or are discussing it. Measured against the immense investment requirements needed to achieve the climate neutrality target, however, there is still room for improvement. Results from a special survey of the KfW SME Panel show that SMEs face a large number of obstacles in planning and implementing climate protection investments, especially in the areas of economic efficiency and financing. A broad mix of instruments is needed to address these barriers. These include, in particular, the creation of suitable framework conditions so that companies embark on the targeted climate neutrality path in the first place, as well as approaches to the financial barriers, e.g. in the support of novel climate protection technologies. >more

IWH
IWH-INSOLVENZTREND FÜR SEPTEMBER: LAGE STABIL, AUSSICHT TRÜB
The number of insolvencies among partnerships and corporations in September was again above the pre-Corona pandemic level. The number of employees affected was significantly higher. The Leibniz Institute for Economic Research in Halle (IWH) expects a noticeable increase in insolvencies in the fourth quarter. >more

ifo Institut
EINE HALBZEITBILANZ – SO BEWERTEN ÖKONOMINNEN UND ÖKONOMEN DIE WIRTSCHAFTSPOLITIK DER AMPEL-KOALITION
The 44th Economists' Panel of ifo and FAZ is dedicated to the current economic policy debates in Germany. It focuses on the economic policy plans of the German government in various areas ranging from energy and income to the legalization of cannabis. 205 economics professors took part in the survey. With an average grade of 4.0, they gave the German government's economic policy a mixed review. With regard to energy policy, the proposal for an industrial electricity price, the "heating law" and the final phase-out of nuclear power are rejected by a large majority. While the sharp increase in the citizen's allowance is also rejected, the moderate increase in the minimum wage receives majority support. The reform of parental allowance and the legalization of cannabis split the profession. >more

Institut der deutschen Wirtschaft
GRÜNDE FÜR DEN STARKEN ANSTIEG DER ZINSAUSGABEN BEIM BUND
The turnaround in interest rates is leaving an unmistakable mark on public budgets. The extent to which this is restricting the scope for action can be seen in the interest-tax ratio. In the course of the zero interest rate phase, interest expenditure as a proportion of tax revenues had fallen as low as never before. Now the figure is rising again - at a much higher rate at the federal level than at the state level. >more

STOCK REPURCHASING BIAS OF MUTUAL FUNDS
Mengqiao Du, Alexandra Niessen-Ruenzi, and Terrance Odean
2023
The paper shows that mutual funds’ trading experiences bias their future repurchasing decisions. Mutual funds are less likely to repurchase a stock if they previously sold the stock for a loss rather than for a gain. After switching to managing a different fund, fund managers still avoid repurchasing stocks they sold for a loss at a past fund. We do not find that mutual fund managers are biased against repurchasing past loser stocks because of superior information. Though less likely to be repurchased, repurchased losers do not underperform repurchased winners – and the fund itself – in the subsequent quarter. >more

ESG SHAREHOLDER ENGAGEMENT AND DOWNSIDE RISK
Andreas G. F. Hoepner, Ioannis Oikonomou, Zacharias Sautner, Laura T. Starks, and Xiaoyan Zhou
2023
We show that engagement on environmental, social, and governance issues can benefit shareholders by reducing firms’ downside risks. We find that the risk reductions (measured using value at risk and lower partial moments) vary across engagement types and success rates. Engagement is most effective in lowering downside risk when addressing environmental topics (primarily climate change). Further, targets with large downside risk reductions exhibit a decrease in environmental incidents after the engagement. We estimate that the value at risk of engagement targets decreases by 9% of the standard deviation after successful engagements, relative to control firms. >more