Open Access

SAFE's monthly Manager Sentiment Index is constructed by extracting sentiment from corporate financial disclosures of listed companies in Germany, offering significant insights into top management’s perspectives. This white paper outlines the methodology behind the index and its financial implications. Information about managers’ assessment of firms’ performance and financial conditions is material to investors but, at the same time, hard to observe. The SAFE Manager Sentiment Index quantifies managers’ beliefs using textual analysis of financial reports and earnings conference call transcripts. We show that the index is a strong predictor of future stock market returns. In summary, the SAFE Manager Sentiment Index provides a practical tool for key stakeholders such as investors, analysts, and policymakers seeking timely signals of corporate sentiment.

Eine oft vernachlässigte Dimension in der aktuellen Debatte zur Schuldenbremse ist die zentrale Rolle deutscher Staatsanleihen als sichere Vermögenswerte („Safe Assets“) für stabile Finanzmärkte. Deutsche Staatsanleihen sichern Finanztransaktionen ab und wirken in Krisenzeiten als stabilisierender Anker. Die Schuldenbremse führt jedoch zu einer künstlichen Verknappung dieser essenziellen Güter und gefährdet damit die Funktionsfähigkeit des Finanzsystems. Deutsche Staatsschulden stellen in diesem Fall keine Belastung dar, sondern dienen als Grundlage für stabile Finanzmärkte und eine effiziente Liquiditätsverteilung. Die Lücke, die fehlende deutsche Staatsanleihen in den Finanzmärkten hinterlassen, wird zunehmend durch US-Staatsanleihen geschlossen, wodurch Risiken anderer Staaten in die EU importiert und die Safe-Asset-Prämie US-amerikanischen statt deutschen Steuerzahlern zugutekommt. Um dies zu verhindern, Deutschlands Rolle als Stabilitätsanker im Euroraum zu festigen und somit die europäische Souveränität zu stärken, ist eine flexiblere Schuldenbremse notwendig, die die Emission sicherer Vermögenswerte ermöglicht und fördert.

This study examines the impact of ESG ratings on fund holdings, stock returns, and firm behavior. First, we show that among five major ESG ratings, only MSCI ESG can explain the holdings of US funds with an ESG mandate. We document that downgrades in the MSCI ESG rating substantially reduce firms' ownership by such funds, while upgrades increase it. However, this response in ownership is slow, unfolding gradually over a period of up to two years. This suggests that fund managers use ESG ratings mainly to comply with ESG mandates rather than treating them as updates to firms' fundamentals. Accordingly, we also find a slow and persistent response in stock returns. For a one-year holding period, downgrades lead to an abnormal return of -2.37%. For upgrades, we find a positive but weaker effect. Yet, the extent to which ESG ratings matter for the real economy seems limited. We find no significant effect of up- or downgrades on firms' subsequent capital expenditure. We find that firms adjust their ESG practices following rating changes, but only in the governance dimension.

We report results from a pre-registered field experiment about the impact of index provider engagement on corporate climate policy. A randomly chosen group of 300 out of 1227 international companies received a letter from an index provider, encouraging the company to commit to setting a science-based climate target to remain included in its climate transition benchmark indices. After one year, we observed a significant effect: 21.0% of treated companies have committed, vs. 15.7% in the control group. This suggests that engagement by financial institutions can affect corporate policies when a feasible request is combined with a credible threat of exit.

Guideline and standards for counterparty risk management, amendments for the classification of crypto-assets, and a directive harmonizing the insolvency law.