Refine
Document Type
- Article (8)
- Working Paper (8)
- Report (2)
- Conference Proceeding (1)
Has Fulltext
- yes (19) (remove)
Is part of the Bibliography
- no (19)
Keywords
- active shareholders (3)
- leveraged buyouts (3)
- private equity (3)
- Basel III (2)
- capital regulation (2)
- compensation (2)
- corporate restructuring (2)
- leverage (2)
- operational performance (2)
- risk (2)
We are able to shed light on the black box of restructuring tools private equity investors use to improve the operational performance of their portfolio companies. By building on previous work considering performance evaluation of PE backed companies, we analyze whether private equity improves operating efficiency and which of the typical restructuring tools are the main performance drivers. Using a set of over 300 international leveraged buyout transactions of the last thirty years, we find that while there is vast improvement in operational efficiency, these gains vary considerably. Our top performing transactions are subject to strong equity incentives, frequent asset restructuring and tight control by the investor. Furthermore, investors’ experience has a positive influence while financial leverage has no influence on operational performance.
This study investigates the transition from being a listed company with a dispersed ownership structure to being a privately held company with a concentrated ownership structure. We consider a sample of private equity backed portfolio companies to evaluate the consequences of the corporate governance changes on operational performance. Our analysis shows significant positive abnormal growth in several performance ratios for the private period of our sample companies relative to comparable public companies. These performance differences come from the increase in ownership concentration after the leveraged buyout transaction.
We examine trust and trustworthiness of individuals with varying professional preferences and experiences. Our subjects study business and economics in Frankfurt, the financial center of Germany and continental Europe. In the trust game, subjects with a high interest in working in the financial industry return 25 percent less than subjects with a low interest. We find no evidence that the extent of professional experience in the financial industry has a negative impact on trustworthiness. We also do not find any evidence that the financial industry screens out less trustworthy individuals in the hiring process. In a prediction game that is strategically equivalent to the trust game, the amount sent by first-movers was significantly smaller when the second-mover indicated a high interest in working in finance. These results suggest that the financial industry attracts less trustworthy individuals, which may contribute to the current lack of trust in its employees.
The paper analyzes the mutual influence of the capital structure and the investment decision of a bank, as well as the incentive effects of the bank executives compensation schemes on these decisions. In case the government implicitly or explicitly insures deposits and/or the banks debt, banks are incentivized to invest in risky assets and to have a high leverage. Capital regulation could potentially solve this excessive risk taking problem. However, this is only possible if the regulator can observe and properly measure the investment risks of the bank, which was called into question during the 2008-09 financial crisis. Hence, we propose a regulatory approach that is also able to implement the first best risk taking levels by the bank, but does not require the regulator to know the investment risk of the bank. The regulatory approach involves the implementation of capital requirements, which are made contingent on the management compensation.
Improving financial conditions of individuals requires an understanding of the mechanisms through which bad financial decision-making leads to worse financial outcomes. From a theoretical point of view, a key candidate inducing mistakes in financial decision-making are so called present-biased preferences, which are one of the cornerstones of behavioral economics. According to theory, present-biased households should behave systematically different when it comes to consumption and saving decisions, as they should be more prone to spending too much and saving too little.
In this policy letter we show how high frequency financial transaction data available in digitized form allows to precisely categorize individual financial-decision making to be present-biased or not. Using this categorization, we find that one out of five individuals in our sample exhibits present-bias and that this present-biased behavior is associated with a stronger use of overdrafts. As overdrafts represent a particularly expensive way of short-term borrowing, their systematic use can be interpreted as a measure of suboptimal financial-decision making. Overall, our results indicate that the combination of economic theory and Big Data is able to generate valuable insights with applications for policy makers and businesses alike.
We build on previous work on operational performance evaluation of private equity portfolio companies as we are able to at least partially decrypt the black box consisting of restructuring tools these investors use and the corresponding impact on their portfolio companies. Beyond answering whether private equity improves operating efficiency we figure out which of the typical restructuring tools drive operating efficiency. Using a set of over 300 international leveraged buyout transactions in the last thirty years we find that while there is vast improvement in operational efficiency these gains vary considerably. Our top performing transactions are subject to strong equity incentives, frequent asset restructuring and tight control by the investor. Furthermore, investors experience has a positive and financial leverage a negative influence on operational performance.
Many QCD based and phenomenological models predict changes of hadron properties in a strongly interacting environment. The results of these models differ significantly and the experimental determination of hadron properties in nuclear matter is essential. In this paper we present a review of selected physics results obtained at GSI Helmholtzzentrum für Schwerionenforschung GmbH by HADES (High-Acceptance Di-Electron Spectrometer). The e+e− pair emission measured for proton and heavy-ion induced collisions is reported together with results on strangeness production. The future HADES activities at the planned FAIR facility are also discussed.
The knowledge of baryonic resonance properties and production cross sections plays an important role for the extraction and understanding of medium modifications of mesons in hot and/or dense nuclear matter. We present and discuss systematics on dielectron and strangeness production obtained with HADES on p+p, p+A and A+A collisions in the few GeV energy regime with respect to these resonances.
The High Acceptance DiElectron Spectrometer HADES [1] is installed at the Helmholtzzentrum für Schwerionenforschung (GSI) accelerator facility in Darmstadt. It investigates dielectron emission and strangeness production in the 1-3 AGeV regime. A recent experiment series focusses on medium-modifications of light vector mesons in cold nuclear matter. In two runs, p+p and p+Nb reactions were investigated at 3.5 GeV beam energy; about 9·109 events have been registered. In contrast to other experiments the high acceptance of the HADES allows for a detailed analysis of electron pairs with low momenta relative to nuclear matter, where modifications of the spectral functions of vector mesons are predicted to be most prominent. Comparing these low momentum electron pairs to the reference measurement in the elementary p+p reaction, we find in fact a strong modification of the spectral distribution in the whole vector meson region.
Basel III and CEO compensation in banks: pay structures as a regulatory signal : [March 6, 2013]
(2013)
This paper proposes a new regulatory approach that implements capital requirements contingent on managerial compensation. We argue that excessive risk taking in the financial sector originates from the shareholder moral hazard created by government guarantees rather than from corporate governance failures within banks. The idea of the proposed regulation is to utilize the compensation scheme to drive a wedge between the interests of top management and shareholders to counteract shareholder risk-shifting incentives. The decisive advantage of this approach compared to existing regulation is that the regulator does not need to be able to properly measure the bank investment risk, which has been shown to be a difficult task during the 2008-2009 financial crisis.