NEWSLETTER of October 6, 2023

The following content has been added at finexpert:

PwC
ASSET AND WEALTH MANAGEMENT REVOLUTION 2023: THE NEW CONTEXT
PwC’s 2023 Global Asset and Wealth Management Survey and 2027 projections reveal how shifting investor expectations will disrupt the status quo. For industry players, the choice is simple—adapt to the new context or fail. >more

Allianz Research
GLOBAL WEALTH REPORT 2023: THE NEXT CHAPTER
2022 was an annus horribilis for savers. Asset prices fell across the board in the "everything slump" scenario. The result was a dismal -2.7% decline in private households’ global financial assets, the strongest drop since the Global Financial Crisis (GFC) in 2008. >more

Neuberger Berman
2023 GLOBAL CORPORATE CREDIT ESG ENGAGEMENT REPORT
In recent years, a variety of market-disrupting events have underscored the importance of active ownership and the analysis of financially material environmental, social and governance (ESG) factors in fundamental credit research and investment decision-making. In our view, asset managers who leverage their relationships with issuers are best positioned to manage these ESG risks and take advantage of ESG opportunities. As highlighted in our prior engagement reports, Neuberger Berman views direct issuer engagement as a critical tool to mitigate portfolio risks while generating long-term sustainable returns. >more

Bridgewater
BREAKING DOWN THE SOURCES OF US ECONOMIC RESILIENCE
One way to understand how the cycle is playing out is by breaking down the spending in the economy into its sources: incomes, borrowing, and changes in saving. Private sector borrowing has been crushed by the tightening and households have stopped reducing their savings, but strong income growth has outweighed these drags and will likely take more than just the tightening to date to crack. >more

IN THE CEO WE TRUST: NEGATIVE EFFECTS OF TRUST BETWEEN THE BOARD AND THE CEO
Kee-Hong Bae, Sadok El Ghoul, Zhaoran Gong, and Omrane Guedhami
2023
In this study, we investigate whether and how trust between board members and the CEO (board–CEO trust) affects the performance of mergers and acquisitions. Contrary to conventional wisdom, we find that firms with higher levels of board–CEO trust exhibit poor M&A performance. High trust is associated with low acquisition announcement returns, long-term stock return performance, and post-deal operating performance. This negative effect of board–CEO trust is more pronounced among acquiring companies prone to agency problems. Our results suggest that, in the institutional setting of corporate boards, high trust can be too much of a good thing. >more

DOES THE CARBON PREMIUM REFLECT RISK OR MISPRICING?
Yigit Atilgan, K. Ozgur Demirtas, Alex Edmans, and A. Doruk Gunaydin
2023
Prior research has documented a carbon premium in realized returns, which has been assumed to proxy for expected returns and thus the cost of capital. We find that the carbon premium partially represents unexpected returns and thus mispricing. Companies with higher scope 1, scope 2, or scope 3 emissions enjoy superior earnings surprises and earnings announcement returns; quarterly earnings announcements account for 30-50% of the premium. We find similar results for changes in emissions but not scaled emissions, consistent with earlier findings on realized returns. Our results suggest that the carbon premium, where it exists, partially results from an unpriced externality, highlighting the need for government action. >more