NEWSLETTER of September 2, 2022

The following content has been added at finexpert:

Heidrick & Struggles
2022 PRIVATE EQUITY-BACKED CFO COMPENSATION SURVEY
For this report, Heidrick & Struggles compiled compensation data from a survey fielded in March and April of this year of 265 senior financial officers, mostly in North America and Europe. While most carried the title of chief financial officer, the survey group also included top or lead financial executives with other titles. >more

KKR
THE CREDIT SUN ALSO RISES
It would be an understatement to say that the second quarter’s volatility left global investors on the edge of their seats. Rising rates continued to rock the equity and credit cages as the risk-off sentiment persisted, driving spreads and yields wider and stunting the primary markets. We continue to live in an ever-evolving market and dare we say, one that feels a bit aimless. >more

Aurum
HEDGE FUND INDUSTRY DEEP DIVE – H1 22
H1 2022 has been an extraordinarily challenging time period, not only for financial markets, but also for the global geopolitical landscape. The hedge fund industry has struggled, down 4.0% YTD. Industry-wide hedge fund assets shrunk in H1 2022, primarily driven by negative performance. Quant is the best performing master strategy year to date, up 10.8%. >more

Bridgewater Associates
EUROPE’S STAGFLATION IS DIFFERENT IN KIND AND MUCH HARDER TO REMEDY
Europe’s energy supply shock is creating a painful stagflation, and policy makers face a difficult set of choices. Looking forward, structurally higher energy prices will be a long-term competitiveness challenge for Europe. >more

THE 'ACTUAL RETAIL PRICE' OF EQUITY TRADES
Christopher Schwarz, Brad M. Barber, Xing Huang, Philippe Jorion, and Terrance Odean
2022
We compare execution quality of six brokerage accounts across five brokers by generating a sample of 85,000 simultaneous market orders. Commission levels and payment for order flow (PFOF) differ across our accounts. We find that execution prices vary significantly across brokers: the mean account-level round-trip cost ranges from –0.07% to –0.45% excluding any commissions. The dispersion is due to off-exchange wholesalers systematically giving different execution prices for the same trades to different brokers. Across brokers, variation in PFOF cannot explain the large variation in price execution. We provide several suggestions for more informative disclosures on execution quality. >more

HOW DO FINANCIAL CONTRACTS EVOLVE FOR NEW VENTURES
Tim Jenkinson, Christian Rauch, and Danying Fu
2022
While previous research has characterized the key features of contracts between entrepreneurs and venture capitalists, little is known about the contracts’ evolution over time and across funding rounds. We overcome significant data challenges to compile a novel panel dataset of U.S. early-stage ventures that includes the main financial and control rights offered to investors at each (equity) funding round. We find that there is a ‘default contract’ with a distinct combination of rights that the majority of companies gravitate to. This default contract is typically implemented in the initial Series A funding round and rarely deviated from in later rounds. Whenever deviations do occur, terms are usually revised in favour of investors, and not entrepreneurs. Due to this stickiness of the default contract, for successful startups we argue that post-money valuations in later rounds can be a reasonable proxy for the economic value of the firm. >more