Charel Theisen

MSc Data Science Student

Thesis: Venture capitalists’ impact on underpricing and post-IPO performance – Empirical evidence from the United Kingdom and Germany

My Queen Mary master’s dissertation:

The purpose of this study is to evaluate the impact of venture capitalists on underpricing and post-IPO performance. A sample of venture capital (VC)-backed companies dating from 1992 to 2014 was compared with a sample of non-VC-backed firms from Germany and the United Kingdom. The long-term return analysis is computed with a buy-and-hold (BHR) approach. The cross-country comparison permits analysing the differences between the different financial systems in both countries. Consistent with previous studies, both types of companies are underpriced in the United Kingdom and Germany. Furthermore, VC-backed and non-VC- backed companies do not outperform the market in the long run. Both countries show similar patterns in both analyses. The overall difference between VC-backed and non-VC firms is not statistically significant. To support the results, a matching approach by propensity score matching was used. However, similar to the previous findings, there were also no statistically significant differences between VC-backed firms in the United Kingdom and Germany. Furthermore, although Germany is considered as a bank-based financial system and the UK as a stock-market financial system, there is no significant difference between both countries. In contrast to results from mainly US studies, this paper finds no evidence for a venture capitalist’s ability to certify the issuing price on the first trading day or for a significant impact on the post-IPO performance. The outcome of this study can be interpreted as evidence for the heterogeneity of the market of venture capitalists, and one can infer that the results of US research cannot be transferred to Europe.

My master’s dissertation “Venture capitalists’ impact on underpricing and post-IPO performance – Empirical evidence from the United Kingdom and Germany” was supervised by Hisham Farag. Drop me a line if you are interested in reading the paper.

Germany Balance of Payments Analysis – Analysis of Germany’s Balance of Payment accounts for 2012-2017

Germany’s trade surplus has been an issue for a significant length of time. In 2016, The country’s trade surplus was about 250 billion USD, or almost 7% of the country’s GDP. This continually rising trend has been present since 2000, and it has now come to the 6th consecutive year that Germany’s surplus has been above 6% of GDP (Evans-Pritchard, 2016). The rapid increase in the country’s trade deficit through out the past decade is predominantly due to the expansion of German competitiveness following the Hartz labour reforms, and the unsustainable booms in peripheral Eurozone economies (Davies, 2016). As well as this, other reasons for the significant trade surplus include Germany’s tight Fiscal policies and the euro being too weak at times to be consistent with German balanced trade (Bernanke, 2015). Germany introduced the euro currency in 1999 first in a non-physical form and later in 2002 as a physical form of payment with notes and coins. Currently, there are 19 EU-member states using the euro as their currency and are thus member of the Eurozone. This means, Germany has no monetary independence and relies on the action taken by the European Central Bank. This makes it different from other countries like the U.S. or United Kingdom because these countries have their own currency and therefore an independent monetary policy.

The following report will be an analysis of Germanys balance-of-payments (BOP) accounts over the past five to eight years. The report will begin with a discussion of the influences and variables which account for fluctuations in the different balances over time, as well as a discussion of the relationship between the shifts in the current-account balance and financial account balance. Following this will be an analysis of the country’s exchange rate against the US dollar for the given period, and a determination of the relationship which exists between the BOP accounts and the exchange rate. Finally, the measures which are suggested for the German government to undertake to aid in improving its balances in 2017-2018 will be presented.

This analysis was part of a coursework during my studies at Queen Mary University.

Are students from business-related degree prone to myopic loss aversion?

The purpose of our experiment is to test whether a person’s academic background affects how prone they are to myopic loss aversion (MLA). We will do this by performing an experiment on students who are studying a business-related degree while also performing the same experiment on students from a non-business related background. The experiment consists of 9 rounds of betting on the outcome of a lottery, with a 2/3 chance of losing the amount they bet and a 1/3 chance of winning 2.5x that amount. The participants for our experiment will comprise of 200 students from University College London split into two groups (business and non-business degrees). These groups will be further split into those who will receive frequent feedback on their bets and those who receive feedback less frequently. This will allow us to test if the participants exhibit behaviour consistent with MLA. Additionally, our study will test students both before the undertaking and after the completion of their degrees. We believe that this will allow us further area for study, as we can test to see if students’ MLA increases or decreases as they become more trained in their respective areas of study.

This is was a group assignment during my International Financial Management master’s degree. Let me know if you want to read the entire paper.

Contemporary Issues in Accounting: Socially responsible investment

Socially responsible investing (SRI) is a stakeholder theory approach that covers financial and non- financial criteria to determine what assets a company should invest in or not (Guay, Doh et al. 2004). With the aid of different criteria, investors have the choice of divers strategies to define whether an investment is socially responsible or not.
The Forum for Sustainable and Responsible Investment gives the following definition: “SRI is an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact” (USSIF 2017). As this definition suggests, the firm’s focus should be on assets, which are both, ethical and social, correct, and still be able to make profit. It is controversial that it is possible to combine SRI and still have positive returns. Some theories suggest that transaction costs increase and the portfolio’s diversification decreases, which leads to a decrease in profits (Luther, Matatko et al. 1992). Other however argue that a social responsible way to invest increases profits because the firm has less risk to suffer from lawsuits and customers’ boycotts (Solomon and Solomon 2003). Despite this ongoing debate, there is a significant rise in SRI worldwide.

The aim of this coursework is to explain SRI and its recent rise and why investors are interested in socially investments. Moreover, this work critically analyses different SRI strategies to understand how firms choose their investments.

Send me an eMail if you are interested in reading this courswork.

Switzerland Economy Report

Amongst the developed countries, Switzerland has been widely reported as an attractive country for foreign investors due to its stable political, economic, along with transparent and fair legal system and reliable financial framework condition. Moreover, an excellent education system and competitive tax system are also the advantages that new foreign firms who wants to expand their assets across the border should take into account. However, Swiss economy is experiencing fluctuations in the stock and bond market that could negatively affect investors. This report will examine the performance of Swiss economy in terms of political analysis, macroeconomics analysis, and market analysis on stock and bond. The report will also depict the investment opportunities of Switzerland based on the changing in stock and bond market during 2014-2016. It will then take Nestle and Novartis and Roche as examples of outperformer and underperformers in reflect of the changing economy in Switzerland before giving a brief forecast of the economy in 2017.

Send me an eMail if you are interested in reading this report.

REE – Foire de recrutement fir Ekonomisten a Juristen

D’ANESEC an d’ANELD invitéieren iech dëst Joer nees op hier traditionell Rencontre Entreprises-Etudiants (REE). D’REE ass eng Jobfair organiséiert vu Studente fir Studenten. Profitéier vun der dëser Geleeënheet renomméiert Firmen kennen ze leieren. Falls du op der Sich no Informatiounen, engem Stage oder engem festen Job nom Studium bass, dann bass du op der REE genau richteg.

Datum: 21.12.2016. Infos op ree.lu