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Finance

Articles, reports, papers and sites pertinent to corporate finance in New Zealand. Apologies if any linked pages drop away over time.

General

  • Recent accounting and finance articles NZICA
  • From Victoria, Dawn Lorimer’s book “Financial Maths for Managers” Wellesley
  • From Massey, Parry, Wirth and Bennett’s book “Fundamentals of Finance: Financial Institutions and Markets, Personal Finance, Financial Management” Pearson
  • Financial education in schools and the workplace MSN

Agency issues

  • Overview by enotes on agency theory and capital structure
  • The conflicting interests of consumer and local authority beneficiaries of the Auckland Energy Consumer Trust (AECT), the 75% shareholder in Vector, 2005 VUW
  • … the courts ruling in favour of the consumer beneficiaries, 2008 AECT

Banking crisis

  • A confession of an ‘informed’ US borrower, May-09 NYTimes
  • Why the benefit of doubt went to the risk-takers – confession of an insider, Aug-08 Economist
  • G30 report on Financial Market Reform, Jan-09 NZFMA
  • Overview of crisis and current situation, May-09 RBNZ
  • Timeline of global crisis Guardian
  • US laws contributing to the financial crisis … the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (FMA) that opened the way for commercial banking, investment banking and insurance to combine … and the Commodity Futures Modernization Act of 2000 (CFMA) that ensured products offered by banking institutions would not be regulated as futures contracts.
  • Matt Taibbi’s attack on Goldman Sachs
  • Impact has been possibly greater than during 1929-1930 shock but the policy response has also been greater Eichengreen & O’Rourke | The Depression as it was at the time NYTimes
  • Impact of the Lehman collapse: a money market fund breaking the buck; risk measures such as LIBOR and TED spread, and the VIX index
  • Paul Krugman’s How did Economists get it so wrong? and John Cochrane’s response
  • Overview of euro and European banking problems Spiegel (3 parts)

Behavioural finance

  • Greater risk taking when under stress Economist
  • Confirmation bias: we tend to find support for what we believe WSJ
  • Reducing the potential for regret is a reason to justify dollar cost averaging, rather than any increase in expected return FamaFrench
  • Some of the ways we (mis-)behave fxmatters

Bond market

  • Current NZ bond prices and yields: Direct broking
  • List of useful international bond websites (from a UK perspective) bondscape

Capital raising

  • Fonterra raises $800m in retail bond issue … debt ratio at 57% above 45-50% target, Mar-09 NBR
  • NZ IPOs: Summerset (2011)
  • International IPOs: GM (2010)

Credit Ratings

  • A user’s guide to credit ratings RBNZ
  • Rate of default for different credit rating categories … see Table 14 for long-term summary S&P
  • Criteria used by S&P

Corporate New Zealand

Efficient markets

  • A run of NASDAQ gains suggests an upward return bias in the near-term but says nothing about 3-month returns MarketWatch
  • ‘Buy’ and ‘Strong buy’ recommendations of Wall Street analysts 1997-2004 returned 8.1% p.a. excess return while similar recommendations by analysts with fund management companies returned 1.9% below the market average Bloomberg
  • The simplest explanation of the observed behaviour of returns is that equity markets are moderately or imperfectly rather than perfectly efficient, and rotate around fair value TheEconomist

Equities information

Financial accounts/ratios

  • Basic examples of analysis that can be gleaned from your financial statements PWC
  • Accounting for intangible assets UABR

Financial structure

  • Overview of some commonly asked questions and key matters to be considered when choosing the appropriate structure for your business PWC

Funds management

  • NZ funds management industry rated a ‘D-’ in May-09 by Morningstar
  • James Simons’s Medallion fund was able to average 35% p.a. over 20 years but the sister Renaissance Institutional Equities Fund (RIEF) lost 16% in 2008 and is again down in 2009, May-09 Economist
  • Luck is a likely explanation of the out-performance of some fund managers FamaFrench
  • Methods to discern skill from luck (Jul-10) Michael Mauboussin of LMCM
  • A Gabelli committee picking 5 stocks per quarter out-performed the S&P500 since 2006

News sites

New Zealand financial environment

  • Overview of NZ business & banking, May-09 Treasury
  • NZ Financial Stability Report published May/Nov RBNZ … also Australia Mar/Sep RBA
  • Bowden and Zhu’s book “Kiwicap: An Introduction to New Zealand Capital Markets” Wellesley

Risk management

Small Business Finance

Source of finance

  • General comments on raising finance business.govt.nz
  • Dealing with banks PWC
  • Financing growth in small and mid-sized companies PWC
  • Dispelling 4 myths about raising equity finance PWC
  • Background to preparing for a new investor/partner in your business ACL Law (pdf)
  • Guide to Commercialising Ideas Idealog Jan/Feb 2010
  • Economic impact of private equity funds NZVCA
  • Survey of 19 NZ Private Equity & Venture Capital firms shows a modest $177m invested in 2009, similar to 2008 but below the $200-1200m invested in earlier years NZVCA
  • Angel investors provided over $50m in 2010 – more investors needed for Seed Co-Investment Fund says NZ Venture Investment Fund AANZ
  • Treasury policy at UK’s Heiton Group Finance
  • Unitec Professor Howard Frederick’s book “Sources of Funding for New Zealand Entrepreneurs” lulu

Valuation

  • Online DCF valuation for NZX companies and many other offshore companies, including offshore benchmarks for NZ companies valuecruncher.com … including for FPA
  • Cost of capital report (WACC), for NZ companies PWC
  • calculating a WACC that makes sense has become significantly more complex with volatile markets, May-09 CFO
  • good starting textbook … Business analysis and valuation: IFRS edition … Palepu, Healy, Bernard and Peek (2007) Cengage
  • Grant Thornton seminar “Principles of valuing businesses and shares”, Apr-09 NZICA
  • Wellington valuer’s notes on valuation and accounting ratios Business Capital Value
  • Hamilton accountant advising how to value a florist propertytalk.com

Working capital