NEWSLETTER of September 23, 2022

The following content has been added at finexpert:

PwC
PWC-STUDIE 2022: PREISENTWICKLUNG IN DER BAUBRANCHE
Inflation in Germany is at its highest level in 50 years. The price increases are also clearly felt in the construction and real estate sector: For two years now, prices for construction products and services have been pointing steeply upwards as a result of the Corona pandemic and the resulting stuttering supply chains. The Ukraine war will cause this price spiral to turn even faster. >more

Mazars
FINANCIAL REPORTING OF EUROPEAN BANKS: WHAT ARE THE LESSONS LEARNT FROM THE COVID-19 IMPACT ON EXPECTED CREDIT LOSSES?
We have analysed the 2021 annual reports of 26 banks in 11 European countries to better understand the impact of Covid-19 on their expected credit losses and how it can help banks prepare as they face new challenges as a result of the war in Ukraine. This study is the fourth in its series and follows on our third edition of the report released in September 2021. >more

Houlihan Lokey
GROWTH EQUITY VALUATION SNAPSHOT
Houlihan Lokey is pleased to present a summary of growth equity observations from its valuation professionals based on real-time market and valuation insights. Investments in growth-oriented businesses or those with long-term cash flow potential run the risk of increasing interest rates, as profitability may be years away. Generally speaking, discounting a longer-dated stream of cash flows at a higher discount rate can materially impact valuation multiples. >more

UBS
ANSWERING THREE KEY QUESTIONS FOR THE REST OF 2022
Rate hikes, a negative European winter, and an end to China’s economic slowdown are three key areas demanding focus for the rest of the year. Here, the multi-asset strategy team shares their insight on these areas. >more

Goldman Sachs
EUROPE’S ENERGY CRISIS IS AT A TIPPING POINT
Russia’s shutdown of the Nord Stream 1 gas pipeline threatens to further squeeze the disposable income of Europeans. A typical family in the EU could face energy bills of €500 per month by early next year without the introduction of price caps, according to Goldman Sachs Research – up 200% from 2021. >more

BANK CEO CAREERS AFTER BAILOUTS: THE EFFECTS OF MANAGEMENT TURNOVER ON BANK RISK
Pramuan Bunkanwanicha, Alberta Di Giuli, and Federica Salvadè
2022
We study whether bank bailouts affect CEO turnover and its subsequent impact on bank risk. Exploiting the Troubled Asset Relief Program (TARP) of 2008, we find that TARP funds temporarily decreased the likelihood of bank CEO turnover during the crisis (2008-2010) but significantly increased CEO changes afterwards. Our results show that replacing TARP CEOs reduced individual bank risk as well as the bank’s contributions to the systemic risk. Finally, we find that TARP CEO turnover was mainly driven by a decrease in the bank’s political capital. Overall we provide evidence that bank bailouts have important implications for banks’ risk-taking and systemic risk, insofar as bailouts affect bank CEO turnover. >more

CSR AND FIRM SURVIVAL: EVIDENCE FROM THE CLIMATE AND PANDEMIC CRISES
Thomas J. Chemmanur, Dimitrios Gounopoulos, Panagiotis Koutroumpis, and Yu Zhang
2022
We analyse the relationship between the extent of a firm’s corporate social responsibility (CSR) and its long-term survival probability. Based on a “nexus of contracts” view of the firm, we conjecture that a better CSR rating is associated with a lower probability of corporate failure and a longer survival period. Consistent with this, we document that four CSR dimensions (environment, community, employee relations, and product) out of six are positively related to firms’ survival probability. We find that a firm’s engagement in CSR activities is particularly crucial for firm survival during pandemics and in states with greater uncertainty induced by climate change and greater demand for regulation related to climate change. The positive association between CSR ratings and firm survival is stronger for firms operating in more competitive industries and those with weaker governance. Finally, better financial performance, more relaxed financial constraints, and enhanced labor productivity are three of the channels through which firms engaging in more CSR activity achieve longer survival times. >more