Finance in Crises: Financial Management Under Uncertainty (Contributions to Finance and Accounting)

✍ Scribed by Tobias Hüttche (editor)

• Publisher: Springer
• Year: 2024
• Tongue: English
• Leaves: 221
• Category: Library

✦ Synopsis

Climate change, COVID-19, Ukraine: it seems that crises are here to stay, which poses major challenges for the financial management of companies. This book addresses these issues, and present concrete approaches to resolving them.

Until recently, the past was considered a reliable basis for predicting the future. As this is no longer the case, financial calculation and management models must take uncertainty into account. This affects the entire discipline of financial management, whether it is the valuation of goodwill in accounting, the estimation of capital costs in company valuation, or the strategic controlling of an international group of companies. There are three main challenges to be overcome: first, uncertainty must be integrated into traditional models, then uncertainty must be quantified, and lastly, potential developments must be modelled. This requires not only a deep understanding of the respective field, but also the ability to suitably adapt traditional modelsand techniques. This volume discusses these issues and offers new insights into how financial management will evolve in light of the current developments.

✦ Table of Contents

About This Book
Contents
Financial Management Under Uncertainty: An Introduction
Part I Financial Management Under Uncertainty: Corporates
Consideration of Uncertainties in Business Valuations
1 Uncertainty in DCF Valuation
1.1 DCF Standard Valuation Model
1.2 Uncertainty and Expected Value
1.3 Valuation Date Principle
2 Cost of Capital
3 Sensitivity Analysis
4 Scenario Analyses
4.1 Basic Principles
4.2 Company Valuation using Scenarios
5 Simulations
5.1 Basics
5.2 Determination of Input Parameters and Creation of the Financial and Valuation Model
5.3 Determination of the Distribution of Input Factors
5.4 Simulation and Interpretation of the Results
6 Conclusion
References
Increased Uncertainty in Times of Crises and Implications for Financial Reporting, Focusing on the Going Concern Principle
1 Introduction
2 Increased Uncertainty Affects the Going Concern Assumption
2.1 Going Concern Value and Realizable Value
2.2 Questions for Assessing the Ability to Continue as a Going Concern
2.3 Examples that Mitigate Uncertainties About Events and Significant Doubt
3 Responsibilities and Tasks
3.1 Corporate Management's Responsibilities and Tasks
3.2 Auditor's Responsibilities and Tasks
3.3 Auditor's Reporting
4 Summary of Questions and Tasks for the Going Concern Assessment
5 Tension and Challenges in Practice
5.1 Different Perspectives and Expectations
5.2 (No) Self-Fulfilling Prophecy
5.3 Suggestions for Resolving the Tensions and Challenges
6 Conclusion
References
Were the Crises of the Recent Past a Litmus Test for Goodwill in the Automotive Industry?
1 Introduction
2 Goodwill and Useful Life
3 The Impairment Concept of Goodwill According to IFRS
3.1 Relevant External Sources of Information
3.2 Relevant Internal Sources of Information
4 Influencing Factors
4.1 Effect of Current Developments on Cash Flow
4.2 Effect of Current Developments on the Interest Rate
4.3 Effect of Current Developments on the Lifespan of Companies
5 Summary
References
Predictive Analytics in Corporate Financial Management:A Case Study on Earnings Forecasting with a Global Logistics Service Provider
1 Introduction
2 Theoretical Framework
3 A Predictive Analytics Case with a Global Logistics Company
3.1 Data Analysis and Method
3.2 Results
4 Conclusion
4.1 Conclusion of the Learnings from the Procedure
References
Internal Control System (ICS) in Times of Crises: Theoretical and Practical Approaches—The Proactive and Reactive Role of the ICS in Switzerland
1 Introduction
2 ICS: Basics
2.1 Implications of Crises: Fraud Triangle
2.2 Defining the ICS with Reference to the COSO Framework
2.3 Legal Regulation and Requirements in Switzerland
2.4 Control Relationships: Using the Example of Swiss Limited Companies
3 Theoretical ICS Approaches Before and During Crises
3.1 Important Elements of the COSO Cube
3.2 Proactive and Reactive Perspectives
4 Practical ICS Approaches Before and During Crises
4.1 Ideas for a Risk Management Concept
4.2 Ideas for an Information/Communication Concept
5 Conclusion
References
Corporate Governance and Corporate Performance: CaseStudy Japan
1 Japan's Path to a Modern and Efficient System of Corporate Governance
2 Traditional Corporate Governance System in Japan and Its Consequences
3 The Life-Long Employment System
4 Staff Directors
5 Dominance of Bank Financing
6 Stable Block of Friendly Shareholders
7 Concluding Thoughts on the Japanese Governance System in the Early 1990s
8 Corporate Governance Reforms
8.1 Reforms Prior to 2012
8.2 Stewardship Code
8.3 Reform of the Company Law
9 Corporate Governance Code
10 Assessment of the Current Corporate Governance System
11 Fujitec Case Study
11.1 Background Information
11.2 Activist investor Oasis becomes shareholder of Fujitec
11.3 Annual General Meeting 2022 and Resignation of CEO Takakzu Uchiyama
11.4 New Appointment of Independent Members to the Board of Directors
12 Resume
References
Controlling of the Circular Economy
1 Introduction
2 Importance of Sustainability
3 Linear Economic System
4 Circular Economic System
4.1 Biosphere and Technosphere
4.2 Model of Circular Economy
4.3 Vision and Strategy of a Circular Economy
5 Sustainability Management and Controlling
5.1 Green Controlling
5.2 Life Cycle Assessment
5.3 Value Chain-Based Emission Determination
5.4 Sustainability Balanced Scorecard
6 Summary
References
Part II Financial Management Under Uncertainty: Markets
Price Discovery in Euro Area Sovereign Credit Markets: Evidence from the GIIPS Countries 10 Years After the Implementation of the Ban on Naked Short Selling of CDS
1 Introduction
2 Background on Sovereign CDS and Bonds
2.1 Sovereign Credit Default Swaps
2.2 Interconnectedness Between Sovereign CDS and Bonds
2.3 EU Regulation on Short Selling and Credit Default Swaps
2.4 Recent Findings on Price Discovery
3 Data
4 Results
5 Conclusion
References
Evolution of Sovereign Risk of European G-SIBs
1 Introduction
2 Evolution of Basel Accords with an Emphasis on Risk-Weighted Sovereign Assets
3 Determinants of Banks Sovereign Exposures
4 The European Sovereign Debt Crisis and Regulatory Responses
5 Analysis
6 Findings
7 Conclusion
References
Electricity Trading with Derivative Instruments: Speculation, Hedging, or Speculative Hedging?
1 Pricing in Electricity Markets
2 Electricity Markets and Trading Products
2.1 Organization Forms of Electricity Markets
2.2 Short-Term Electricity Markets
2.3 Medium- and Long-Term Electricity Markets
3 Accounting Issues for Electricity Generators
3.1 Futures
3.2 Forwards
3.3 Accounting Mismatch
4 Recent Developments in the Electricity Markets
4.1 Turbulence in the Electricity Markets 2021–2022
4.2 Impact on Liquidity of Electricity Producers
4.3 Rescue Packages as an Answer
5 Hedging, Speculation, or Speculative Hedging?
6 Summary
References
Gauss Versus Cauchy: A Comparative Study on Risk
1 Introduction
2 Theoretical Background
3 Student, Cauchy, Gauss Distribution
3.1 Student's Distribution
3.2 Cauchy's Distribution
3.3 Gauss' Distribution
4 Empirical Analysis
4.1 Estimation Methodology
4.2 Estimation Results
4.3 Goodness-of-Fit
5 Application
6 Conclusion
References
Household Saving in Times of Crisis
1 Introduction
2 Saving and Consumption over the Life Cycle
2.1 Consumption Response to Predictable Income Changes
2.2 Precautionary Savings
2.3 Portfolio Allocation
2.4 Life Expectancy
3 Cross-Sectional Determinants of Saving Behavior
3.1 Wealth
3.2 Lifetime Income
3.3 Language
3.4 Financial Literacy
3.5 Mortgage Borrowing
4 How to Increase Retirement Savings?
4.1 Policy Interventions
4.2 Financial Advice
4.3 Peer Effects
5 Similarities Between Parents and Children
5.1 Saving Behavior
5.2 Wealth
5.3 Income
5.4 Time and Risk Preferences
5.5 Human Capital
5.6 Investment Behavior
6 Summary
References