An Empirical Study of Country Risk Adjustments to Market Multiples Valuation in Emerging Markets: the Case for Russia
Valuation in emerging markets is always a challenge. The existence of sovereign risk and capital market segmentation as well as small trading volumes and narrow domestic capital market make it difficult to identify peer companies for market multiples valuation without cross- border comparables. This paper investigates the practical implementation of market multiples valuation in emerging markets when the analyst should involve peer companies from developed markets. Companies with comparable operational parameters bear different values on different financial markets. The problem of unavoidable difference among national stock markets exists, that is why methods of cross-border multiples’ corrections are called for. We address cross-border corrections procedures for adjusting multiples to a sovereign risk to find out the role and the extent of these type of adjustments in valuation. We are using the samples of Russian and US companies to test three different adjustments’ techniques: the sovereign spread, the relative market coefficients and the regression approach.
We attempt to integrate the notion of responsibility into the methodology of the "psychometric paradigm", designed to identify the dimensions of risk perception. A modified version of the methodology is proposed, which includes a number of questions about various aspects of responsibility. The preliminary results show that it is possible to formulate the hypothesis of responsibility as an independent dimension of risk perception, which, however, is closely related to the “dread” factor traditionally found in this kind of research.
The main purpose of the monograph is to present an innovative assessment tools in the implementation of customer-oriented banking. To do this, in this paper we study the theory of the formation of the valuation of the effectiveness of management of the corporate client in terms of interaction with the investment bank. The theoretical and methodological bases and conceptual modeling unit investment activity aimed at identifying reliable potential borrower from the bank . A new planning tool developed based on the regression analysis of indicators of the bank's cooperation with corporate clients and macroeconomic data. The developed model can serve as an element of the overall management of bank liquidity . Publication addressed a wide range of readers interested in the problems of client banking. Work will be useful for scientific , primarily economic community for students, faculty and graduate students of economic universities and faculties, for those readers who are interested in banking processes aimed at identifying the needs of corporate clients.
The published article is the result of the analysis of a fragment of the ontology of texts created in the political discourse of the Nizhny Novgorod region. The frame structure (actants) of the texts on the political topic is presented in the asrticle. The object of research is the slot "evaluation" (the tone: a fragment of thesaurus of assessment tools is taken and interpreted from the point of meaning, expression and political correctness).
The Empirical evidence on fiscal multipliers is very heterogenous. In this paper we first survey available estimates of fiscal multipliers to try to understand their heterogeneity. We provide a general framework that allows to make the identification and specification choices made by the different authors explict and leads hopefully to a better understanding of the heterogeneity of results.
The article investigates the main types of cost used for the purposes of valuation and accounting practices. The relationship and the types of strategic decisions are made with the value and kind of value capital of the commercial organization. The proposed principal base strategic decisions that may be taken based on the information on the capital value.
Valuation of biological assets is one of the least described and most specific areas in theory and practice of valuation. In the absence of comparable asset prices, the appraiser may apply methodology of the income approach, which requires several subjective assumptions. The author considers peculiarities of application of the income approach to valuation of crops, animals and land lease rights; disadvantages of the income approach, including subjective assumptions, and alternative application of the comparable and direct cost approach.
Emerging market companies typically have lover values than their counterparts in developed markets. In order to account for this practitioners typically use an ad hoc premium in discount rate in their DCF models – so called country risk premium. Approaches for this premium calculation do not have adequate theoretical basis in the literature. There is an alternative to premium which is in accounting for a country risk through scenario approach. However it is difficult to implement practically because of the calibration problem. Thus there is a problem of a country risk.
The concept of country risk premium has to be abandoned. We propose following procedure in emerging company DCF valuation.
1) Calculate theoretical discounted value as if the business is from developed country.
2) Account for the risk of an emerging market applying the discount. The discount can be obtained through analysis of differences between emerging and developed stock market multiples. As a result the problem of an emerging country risk stops being "black box" and becomes clear, observable and verifiable.
This paper proposes critical analysis of the theory and practice of discount rates. In addition paper gives a theoretical basis for country risk from the prospective of New Institutional Economics.