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An average investor trying to allocate his wealth among multiple assets ideally has nearly infinite possibilities to do so. However, asset allocation strategies try to facilitate this process. Nevertheless, no consensus exists on which strategy is ideal and yields the best performance. Therefore, this paper aims to determine an ideal asset allocation strategy for an average investor by comparing two asset allocation strategies.
The focus is on comparing the practical application of Markowitz’s Modern Portfolio Theory (MPT), a sophisticated asset allocation strategy, with an equally weighted asset allocation, namely the 1/N strategy. The past performance of these two strategies is compared with the help of a calculation example based on historical data. The quantitative analysis covers three time periods of different lengths between 1991 and 2022. Also, the strategies are applied to portfolios with different amounts of assets during these periods. Although the existing literature is very controversial concerning the performance of the two strategies, this research shows a clear result. Compared to the 1/N strategy, this study’s findings show an outperformance of the MPT strategy during every period and each portfolio combination. However, the difference in performance regarding return and risk is minimal in most scenarios and would not significantly affect an average investor who invests over a long-term horizon.
Die bisherige Forschung zu nachhaltigen und sozial verantwortlichen Investitionen konnte finanzielle, nichtfinanzielle und soziale Einflussfaktoren für die Investitionsentscheidung nachweisen. Ziel dieser Arbeit war die Identifikation der wichtigsten Motiven und Barrieren, die junge Menschen in Deutschland beim Investieren wahrnehmen. Dafür wurde eine Umfrage mit 354 Teilnehmern, die zwischen 18 und 25 Jahre alt waren, durchgeführt. Es wurden Daten zu neun Motiven und elf Barrieren erhoben. Entgegen der Annahme, dass nichtfinanzielle Motive überwiegen, zeigen die Ergebnisse, dass junge Menschen vor allem an einen Trend von nachhaltigen und sozial verantwortlichen Geldanlagen glauben und davon profitieren möchten. Junge Menschen sind demnach vom Wachstum des Marktes überzeugt. Als wichtigste Barriere wurde Informationsdefizite der Anleger angenommen. Die Erkenntnisse aus der Studie zeigen jedoch, dass für junge Menschen die Intransparenz der Anlagen die relevanteste Barriere darstellt. Unternehmen, Anbieter und regulierende Marktteilnehmer sollten, um das Wachstum des Marktes zu fördern, Maßnahmen einleiten, die diese Barriere abbaut.
This paper aims to evaluate the European Green Bond market's current state by analyzing the issuer countries, types, and sectors. Moreover, the impact of regulatory developments in the last two years on the market is analyzed. As a basis for discussion, both literature review and qualitative research in the form of a semi-structured interview were conducted. The interviews were held with four market experts to gain insight into the actual market's reaction to the EU Green Bond Standard and the upcoming EU Taxonomy. In detail, the following questions are answered: What is the current state of the European Green Bond Market? How many bonds are currently issued in Europe and in which countries? Which entities are the most active issuers, and to which sectors do they belong? What are the current developments with regards to regulations? How might upcoming regulations affect the market actors? The European green bond market made up 45% of the global market in 2019, dominated by Germany, France, the Netherlands, Sweden, Spain, and Italy. The market is still in its growth phase, with the amount issued nearly doubling each year. With the introduction of an EU Green Bond Standard, detailed standardization and framework is established. It will help issuers to overcome market barriers such as the risk of greenwashing and helps in identifying eligible projects. However, with the alignment of the EU GBS, an entity has to align with the extensive EU Taxonomy as well, which represents entry barriers to else willing corporations. Whether an activity counts as green or not based on thresholds is defined by the classification of economic activities. The thresholds are heavily discussed in the market as either too high and excluding whole sectors from the market or too low and not ambitious enough. The alignment with the EU GBS and thus with the EU Taxonomy is connected to various efforts. Nonetheless, it offers a great chance for the market by emphasizing the need for climate action. Through this, a strong green market can emerge and hopefully impacts the world positively.
Zur Stabilisierung der Konjunktur im Zuge der Covid-19-Krise hat die Bundesregierung Deutschlands mit der vom 01. Juli bis 31. Dezember 2020 eingeführten temporären Mehrwertsteuersenkung auf ein noch neuartiges konjunkturpolitisches Instrument zurückgegriffen. Dieses ist zentraler Teil eines mit 130 Milliarden dotierten Konjunkturpakets.
Ziel dieser Arbeit ist, die Wirksamkeit zentraler Elemente der Konjunkturpolitik anhand der damit verbundenen Anforderungen zu untersuchen und die Mehrwertsteuersenkung in diesem Kontext auf ihre Eignung zur Konjunkturstimulierung zu überprüfen. Zur empirischen Untersuchung wurden Experteninterviews mit Wirtschaftswissenschaftlern und betroffenen Verbänden durchgeführt. Die ersten richtungsweisenden Erkenntnisse aus den Interviews, Praxisbeispielen und bestehender Theorie zeigen, dass die Mehrwertsteuersenkung zwar zeitnah und temporär umgesetzt werden konnte, jedoch als wenig zielgerichtet und effektiv zu bewerten ist. Der von der Bundesregierung erhoffte Konjunktureffekt ist als gering zu beurteilen und kam Krisengewinnern stärker zu Gute als besonders betroffenen Branchen. Im Kontext der pandemiebedingten Krise wird zudem die grundsätzliche Wirksamkeit nachfrageorientierter Maßnahmen sowie die praktische Handhabung und zeitliche Koordinierung der Mehrwertsteuersenkung kritisch hinterfragt.
Funding is the key to success for a start-up. Since start-ups are often operating in innovative industries, they rarely receive loans from traditional debt lenders such as banks. However, start-ups do have the option of acquiring money for company growth through equity financing. One possibility for this is venture capital. In this scope, Germany is significantly behind the United States of America due to various aspects. This problem shows the relevance of the topic and justifies the critical examination of this subject. This work aims to analyze the German venture capital market, its development over the last 20 years, its advantages on the one hand and its disadvantages on the other hand as well as its future perspectives. Beyond that, the differences between the German and the American venture capital market and its success factors are presented. To answer all research questions, a broad literature review in combi-nation with several conducted expert interviews, which are evaluated on the principle of the qualitative content analysis according to Mayring, is applied. The results of the analysis indicate that there are mainly three fields that are crucial for a successful venture capital market: Political actions, attitudes of the society, and the economic situation. Within these fields, some aspects of Germany are considered worse than in the U.S. In the United States of America politics often intervenes to create better conditions for investments via venture capital. Besides, the risk affinity of society in the U.S. is a major advantage compared to the risk-averse society in Germany. This is complemented by a pronounced start-up mentality in the U.S. and the positive attitude of society towards the failure of a new start-up. In Germany, the opposite can be found in both aspects. Nevertheless, the German venture capital market has developed positively in recent years and has some advantages, such as a wide range of government grants for start-ups and the opportunity for investors to earn high returns on the initial investment. All experts that were interviewed are very confident that venture capital in Germany will continue to develop positively. They identified the reasons for this evolution in an increasing number of start-ups and better skills among the founders, which increases a start-ups' chances of success. For this reason, the experts forecast rising yield expectations, as well as an increasing number of venture capital providers, and venture capital takers. This research also indicates that the volumes of venture capital funds will rise, and the COVID-19-pandemic will accelerate the development of venture capital in Germany. The results of the research clearly show that despite some weaknesses, the German venture capital market has been on a good path for several years, and that there is a high probability that the growth will continue in the future.
This study is aimed at valuing two companies in the IT services industry with different valuation approaches. Therefore, the preconditions for an accurate and meaningful business value as well as the procedure, strengths and limitations of these approaches are examined. Additionally, the accuracy of the results is determined through comparison of valuation estimates with their corresponding stock prices occurring within the three months following the business valuations.
Furthermore, it is examined if one valuation approach is superior in terms of accuracy. Finally, to verify the quality and explanatory power of the valuation results, they are compared with the outcomes of the study on the information content of equity analyst reports by Paul Asquith, Michael B. Mikhail and Andrea S. Au. The results of the business valuations show that within the three-month period, no price target was exactly achieved by the corresponding stock prices.
Furthermore, no valuation approach could be determined that is significantly more accurate than the others. It can be concluded that despite some limitations in the explanatory power of the valuations, the average percentage approximations of Mastercard’s and Visa’s stock prices to target prices were only slightly below those of the comparative study. In view of the fact that the research capacities and experience behind these business valuations are significantly lower than those of the top analysts in the comparative study, the results are considered consistent with the outcomes of the study on the information content of equity analyst reports.
An analysis of the inter-rater reliability of ESG ratings within the consumer staples industry
(2020)
The aim of this study is to gain further insights into whether ESG ratings of the same firms from different rating agencies differ. To this end, this study examines and compares in particular the ratings of the providers Bloomberg, Sustainalytics and MSCI for companies in the consumer staples industry. The study comes to the conclusion that there are in some cases significant differences between these three providers in terms of the respective ESG ratings. Furthermore, a company-size bias is shown for Bloomberg and Sustainalytics ESG ratings. It appears that these agencies rate companies with a large market capitalization better than firms with a lower market value. These large discrepancies in ESG ratings of companies within the consumer staples industry and individual rating problems, such as the company-size bias, mean that today's ESG ratings tend to be not reliable and not valid. The study shows that ESG ratings will have to change a lot in the near future in order to contribute positively to the investment selection of socially responsible investors.
Industry 4.0, a term coined at Hannover Messe in Germany in 2011, is believed to be the next disruptive force, driving human progress and innovation. The advent of technologies, such as the Internet of Things, Cloud Computing, Big Data, and new Mobile Technologies, fuel this disruption. To enable Industry 4.0, mankind is dependent on technological infrastructure, provided by companies, operating in the semiconductor industry. Over the last years, these companies have increased their profits and their stocks are currently trading near all-time highs. Yet, uncertainty created by the disruption of Industry 4.0, the growing influence of China on the semiconductor market, economic insecurities created by political uncertainties, like the 2020 US Presidential election, and the risk and implications of a second global wave of the COVID-19 pandemic, make the equity valuation of leading and established companies in the semiconductor industry exceptionally challenging. This paper examines, how different equity valuation methods compare under said circumstances and shows sophisticated valuation methods must be used to limit valuation error. Further, this paper gives an estimation of the possible ranges of value and suggests the industry may currently be overvalued.