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This article on raising wealthy children to be philanthropic is prompted by the £5.5Tn wealth transfer predicted to take place in the United Kingdom over the coming decades. The impending wealth transfer presents an unprecedented income opportunity for a charity sector faced with increasing societal needs and declining statutory income. Drawing on the premise that engaging children in philanthropic activities can lead to higher participation levels in adulthood, this paper examines how children from wealthy households engage with philanthropy at home and school. A mixed‐methods approach involving research with and not on children is used to explore what kind of philanthropic citizen these children are becoming. Two surveys, five focus groups, and four interviews were used to generate insights from 222 'financially secure' 9 to 11‐year‐old children, 113 parents and four teachers. The study, drawing on models of citizenship, finds a cohort of children exhibiting characteristics aligned with the concept of 'personally responsible' philanthropic citizens. This outcome is considered desirable for promoting charitable giving among a demographic likely to have the means and resources to give generously in adulthood. However, the findings suggest a lack of opportunities for children to acquire the knowledge and skills that enable informed giving decisions or the spaces in which to critically engage with charities, causes, and the issues that create the need for philanthropy in the first place. The research supports calls in the literature for a more participatory and social‐justice‐oriented approach to philanthropic education and participation in schools. The findings, of interest to scholars and practitioners alike, address a gap in empirical evidence regarding children and philanthropy in the United Kingdom. [ABSTRACT FROM AUTHOR]

Intergenerational financial assistance with home ownership has attracted increasing scholarly interest in recent years. Existing research has focussed primarily on its impact on inequality, housing market outcomes and notions of meritocracy, as well as the relational dynamics through which it is negotiated. The topic of financial elder abuse has, however, remained an area of relative silence in this literature despite concerns raised by advocacy groups. In this article, we consider how intergenerational financial assistance may facilitate attitudes and behaviours that can result in financial elder abuse. To do so, we draw on an analysis of the Banking Code of Practice and the presumption of advancement, each of which shapes the way intergenerational financial assistance with home ownership unfolds in Australia. We then consider how such arrangements play out in practice through analysis of interviews conducted with donors and recipients of assistance of this type. We ultimately argue that in the context of intergenerational financial assistance with home ownership, the potential for financial elder abuse should be considered not just as an individual or family issue rooted in relationships, but as the outcome of ageist social attitudes and structural problems in the asset economy. [ABSTRACT FROM AUTHOR]

Historical aristocratic families, as economic units, can in some ways be seen as the forerunners of today's family businesses. These wealthy families had essentially the same or similar issues and needs in terms of wealth transfer, inheritance and succession as today's family businesses. The entail (fideicommissum) was the technical legal solution, or legal institution, which enabled the historic aristocratic families to preserve their economic strength from generation to generation, to keep their wealth together and to develop their specific succession arrangements which have survived for centuries. However, prior to the legal declaration of the entail, the enforceability was always a question mark, and it is a problem that family businesses today are still faced with in relation to certain legal instruments and technical solutions in the area of succession. This paper will first review the history of the development of family businesses and then examine the legal institution of the entail and its various forms, drawing parallels between the historical aristocratic families and the family businesses of today, based on essentially identical interests and aspirations. [ABSTRACT FROM AUTHOR]

– The authors investigate whether the effects of stock buyback announcements on credit default swap (CDS) spread changes for US firms depend on macroeconomic conditions. The authors find that abnormal CDS spreads increase for small-sized firms announced to repurchase a higher share ratio during the normal period. In contrast, abnormal CDS spreads decrease for big-sized firms regardless of the magnitude of the repurchase ratio during the crisis period. The results of this study suggest that the wealth transfer effect dominates the signaling effect for small-sized firms with higher target ratios during the normal period. In contrast, the signaling effect is stronger for bondholders of big-sized firms during the crisis period.

Estimating the producer surplus – the revenue above the average long-run cost – is an important part of social cost-benefit analyses of changes in petroleum use. This paper estimates the producer surplus associated with changes in gasoline fuel use in the United States, and then applies the estimates of producer surplus to two kinds of social cost-benefit analyses related to petroleum use: (1) estimating the wealth transfer from consumers to producers as a result of policies that affect oil use and oil imports to the US, and (2) comparing the actual average cost of gasoline with the average cost of environmentally superior alternatives to gasoline, such as hydrogen. Our results show that a 50% reduction in gasoline use in the US in 2004 would have saved the US $72 billion in producer surplus payments to foreign oil producers. Applying our estimates to the comparison of the social lifetime cost of hydrogen vehicles versus gasoline vehicles, we find that inconsistently counting producer surplus from a US national perspective while counting climate change damages from a global perspective can overstate the present value lifetime costs of gasoline vehicles by $2,200 to $9,800 per vehicle.

It is estimated, that between 2015 and 2024 about 3 trillion € will be inherited in Germany. Due to far-reaching tax exemptions, the inheritance tax revenue per year is only about 7 billion €. Despite the fact, that the income or value-added tax burden is significantly higher, the inheritance tax is more unpopular than other taxes. The objective of the paper is to figure out, whether there is evidence of high tax evasion in the field of German inheritance tax, with a view to the low tax revenue and the high unpopularity of the tax. Therefore, data from the official inheritance tax statistic is compared with secondary data from studies, which estimate the yearly wealth transfer to the next generation by using survey data. The assumption is, that asset classes, which are easy to evade, should be recorded with a lower amount in the official tax statistic, than in the survey-based estimations. But the results do not show evidence of high tax evasion in the field of inheritance tax. As until now, only a small part of the inheritances is recorded in the official inheritance tax statistic, for the future it is recommended to the government, to record all inheritances in the official statistic. Because of far-reaching reporting obligations, the tax offices anyway have knowledge of most inheritances and the additional bureaucratic effort to record the additional data in the official tax statistic is small.

Daily liquidity to investors is promised by mutual funds, which allows them to redeem their money based on the prevailing Net Asset Value (NAV). A number of factors like trading suspension and daily price limits can cause redeemed NAV to deviate from the intrinsic values of fund units. Such “staleness” in prices can create arbitrage opportunities for the investors, who can invest or redeem their money at the expense of other passive investors. Using hand-collected data from quarterly mutual fund holdings, we documented significant deviations between the announced and “true” NAVs of Iranian mutual funds. We found that the investors reacted to and took advantage of such deviations. The wealth transfer between the fund investors was estimated to be approximately 1.3% of Total Net Asset (TNA), which was 4 times larger than the wealth transfer documented in the previous studies.

Since the 2008 crisis, derivative dealers charge to their clients various add-ons, dubbed XVAs, meant to account for counterparty risk and its capital and funding implications. As banks cannot replicate jump-to-default related cash ows, deals trigger wealth transfers and shareholders need to set capital at risk. We devise an XVA policy, whereby so called contra-liabilities and cost of capital are sourced from bank clients at trade inceptions, on top of the fair valuation of counterparty risk, in order to guarantee to the shareholders a hurdle rate h on their capital at risk. The resulting all-inclusive XVA formula reads (CVA + FVA + KVA), where C sits for credit, F for funding, and where the KVA is a cost of capital risk premium. All these XVA metrics are portfolio-wide, nonnegative and, despite the fact that we include the default of the bank itself in our modeling, they are ultimately unilateral. This makes them naturally in line with the requirement that capital at risk and reserve capital should not decrease simply because the credit risk of the bank has worsened. An application of this approach to a dealer bank reveals, in particular, the XVA implications of the centrally cleared hedging side of the derivative portfolio of the bank. [ABSTRACT FROM AUTHOR]

This study investigated the relationship between the five‐factor model personality traits and parents' intentions to leave unequal bequests to their children. A sample of 1229 was drawn from the 2016 wave of the health and retirement study. As predicted by the study's hypotheses, the results found that conscientiousness was negatively related to unequal bequests, while extraversion was positively related to unequal bequests. Opposite of the study's prediction, however, was a positive relationship between agreeableness and unequal bequests. Although the effect sizes were small, financial planners can easily use these findings to better understand how their clients' personality traits may play a role in their wealth transfer intentions. [ABSTRACT FROM AUTHOR]

Despite criticism in the wake of the GFC, history shows that theory and curricula adapt to rectify any disconnects between theory, curricula, and practice. Finance theory unquestionably has antecedents in economics, accounting, legal theory, and psychology. Some theoretical developments--including the moral hazard consequences of limited liability--have yet to filter through to many texts and curricula, which also omit explanations of uncertainty; incomplete and (sub)optimal contracting; contagion; and behavioural finance. Student learning outcomes could be enhanced if universities, perhaps in a final year, cross-disciplinary "capstone" course, empowered students to understand the financial documentation evidencing sophisticated transactions; map relevant cash flows and wealth transfers; and recognise Ponzi schemes, the ethics of stakeholder wealth transfers, the conditions for contagion, and incentives for adverse selection and moral hazard in practice. [ABSTRACT FROM AUTHOR]

Previous research indicates that firms issue shares when their stock is overpriced and repurchase shares when their stock is underpriced. Such transactions transfer wealth from transacting stockholders to ongoing stockholders. We quantify the magnitude of these wealth transfers and analyze their implications. Strikingly, we find that for the average firm-year, these wealth transfers approximate 40% of net income. We also find that these wealth transfers can be predicted using a variety of firm characteristics and that future wealth transfers are an important determinant of current stock prices.

Inheritance drives wealth concentration and economic inequality, meaning there is a strong case for wealth transfer taxation as an important element of government redistributive policy. In contrast to many OECD countries, Australia has not had estate or inheritance taxes for 40 years and little is known about contemporary public attitudes towards wealth transfer taxation. This paper draws on qualitative interviews investigating the attitudes of young adult and senior Australians towards wealth transfer taxation. Both groups supported the idea of reintroducing wealth transfer taxation in Australia, largely due to an almost universal absence of expectation that people would or should leave bequests to their descendants. These findings raise the possibility that considering the reintroduction of appropriately targeted wealth transfer taxation in Australia at a time when the Commonwealth Government is experiencing acute fiscal pressures may not generate as much public resistance as might have been assumed. [ABSTRACT FROM AUTHOR]

XVAs denote various counterparty risk related valuation adjustments that are applied to financial derivatives since the 2007–2009 crisis. We root a cost-of-capital XVA strategy in a balance sheet perspective which is key to identifying the economic meaning of the XVA terms. Our approach is first detailed in a static setup that is solved explicitly. It is then plugged into the dynamic and trade incremental context of a real derivative banking portfolio. The corresponding cost-of-capital XVA strategy ensures for bank shareholders a submartingale equity process corresponding to a target hurdle rate on their capital at risk, consistently between and throughout deals. Set on a forward/backward SDE formulation, this strategy can be solved efficiently using GPU computing combined with deep learning regression methods in a whole bank balance sheet context. A numerical case study emphasizes the workability and added value of the ensuing pathwise XVA computations. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to highlight that contingent capital certificates (CC certificates) provide financial institutions with the cushion to resist financial crises, but if the structure of these CC certificates is based on singular trigger, it can cause transfer of wealth between investors i.e. existing shareholders and the CC certificate holders. Many financial institutions, till date, have issued CC certificates based on singular trigger (i.e. capital ratio/Accounting triggers or market-based triggers) which are not as effective and reliable as multiple triggers. The paper includes a hypothetical base case to understand the triggers and case of Lehman Brothers Inc. (which filed chapter 11 bankruptcy protection on September 11th, 2008) to examine how the single trigger approach of the issuing financial institution can cause a transfer of wealth between the existing shareholders and the CC certificate holders. Book values of CC certificates are used to measure the transfer of wealth. [ABSTRACT FROM AUTHOR]

Abstract The intergenerational transfer of assets helps create and maintain wealth inequality over time, and cohort differences in these wealth transfers provide unique insights into the changing mechanisms that lead to inequality. We examine cohort differences in asset transfers in two ways. First, we explore whether there are general cohort differences. Second, we examine how transfers have changed across four specific U.S. birth cohorts. We draw on ideas from research on cohort succession processes to document differences across cohorts in financial resources, and we draw on work on bequest behavior to address how resource differences might lead to cohort differences in transfers. Using the Survey of Consumer Finances, we find that members of younger cohorts are less likely than members of older cohorts to receive any transfer but that younger recipients receive larger transfers. We also find that members of younger cohorts are less likely to receive inheritances and trusts, more likely to receive inter vivos gifts, and less likely to inherit at any age than members of older cohorts. Our findings underscore the importance of birth cohorts in studies of inequality and suggest that wealth inequality may worsen over time given that a smaller number of people are receiving large transfers. [ABSTRACT FROM AUTHOR]

Though studies have clearly illustrated that education is one of the primary paths to upward mobility, a growing body of research is beginning to show that the returns on education are determined more by initial wealth than innate ability and exerted effort in school. This accounting directly contradicts Americans’ understanding of the promise of the American Dream: a level playing field and a path towards a more prosperous future. Currently, this contradiction goes largely unchecked by researchers because of their reluctance to engage in a discussion about values. As a result, the mere discussion of wealth transfer, a policy about thriving, is seen as taboo, and we are left with conversations about how to provide the poor with enough merely to survive. However, in this paper, the conversation about wealth transfer is revived and articulated as an American idea consistent with American values. It goes on to offer Children’s Savings Accounts, in combination with a substantial progressive wealth transfer into these accounts, as a means of leveling the playing field and restoring education as an equalizer in society. [ABSTRACT FROM AUTHOR]

This article offers a critical ethnography of the reproduction of elites and inequalities through the lenses of class and gender. The successful transfer of wealth from one generation to the next is increasingly a central concern for the very wealthy. This article shows how the labor of women from elite and non-elite backgrounds enables and facilitates the accumulation of wealth by elite men. From covering "the home front" to investing heavily in their children's future, and engaging non-elite women's labor to help them, the elite women featured here reproduced not just their families, but their families as elites. Meanwhile, the affective and emotional labor of non-elite women is essential for maintaining the position of wealth elites while also locking those same women into the increasing inequality they help to reproduce. [ABSTRACT FROM AUTHOR]

The objective of this paper is to test whether companies use corporate bond reopenings to exploit overvalued debt. Reopenings represent new debt offerings, which are characterized through identical configurations as an already outstanding bond, but with a market-adjusted price. Their advantage lies with the fact that fewer preparations are required compared to a new regular offering. For a set of European companies our results suggest that stockholders respond less positively to the announcements of reopenings than to regular offerings. This effect is stronger, the higher the pre-issue bond price run-up, and the stock price reaction is directly linked to the change in the firm’s debt value. Additionally, the prices of the reopened bonds drop on the announcement day. Therefore, in line with the window of opportunity theory, the firm’s management appears to use reopenings as a fast and inexpensive way to raise debt capital, which leads stockholders and bondholders to suspect an overvaluation and therefore to adjust their price expectations. The analysis also reveals that the redistribution of wealth from bondholders to stockholders is a major determinant for the observed price changes. [ABSTRACT FROM AUTHOR]

Scale-free property exists in resource distribution, and the rich pay more in public goods is commonplace in reality. What will happen if the rich are expected to contribute more in the spatial public goods game? This paper therefore proposes a new contribution paradigm, in which individual contribution is determined by his payoff in the last evolution step. Tunable parameter w is used to characterize the contribution rate of nodes whose payoff is larger than the average. The results of simulations reveal that the impact of w on cooperation is associated with the enhancement factor r . When r is low, the higher w is, the lower the cooperation rate is. With the increment of r , the value of w to optimize cooperation rate increases with r . The relationship of cooperation rate and wealth on the network has also been investigated. Interestingly, higher cooperation rate does not always lead to higher wealth. Finally, the impact of w on the wealth distribution on the network is explored. The higher w reduces the inequality in wealth distribution by the shrinking of lower-class, which is enhanced by a higher r . [ABSTRACT FROM AUTHOR]