The article presents the results of the research regarding abnormal return in M&A deals with private and public targets in emerging markets. The research was devoted to empirical verification of the dependence of buyer's abnormal return on the factors determining private target discount, as well as excess premium paid for the target compared to average industry multiples. Private target discount was defined as the difference between the deal value and the price calculated based on average multiples of comparable public companies. In addition the ability of the market to differentiate deals with wrong motivation, in particular transactions aimed at bootstrapping, was analyzed.
The study presented in the article is devoted to topical problems of the Russian venture capital market. Despite the fact that this area has good funding from the state and the presence of large development institutions, today it can not be called successful. The authors aim was to characterize the current state of the venture market in Russia, identifying the most important problems, and form recommendations for overcoming these problems. It was accomplished by taking in-depth interviews with leading experts in the field – representatives of investment and venture funds, state development institutions and business angels. Obtain expert evaluation allowed the authors to form a holistic view about the current situation on the venture capital market, as well as to identify the possible ways of its further development.
This article analyses current Russian and foreign models of public-private partnership (“PPP”). Based on the results of
this analysis, a method for project evaluation is proposed which is applicable to numerous variations of PPP models. As a
part of this analysis, a review of international experiences in PPP (from France, the UK, China and the USA) is under
taken, which examines the prospects for the implementation of PPP mechanisms in road infrastructure projects.
The purpose of this article is the enhancement of the PPP mechanism in the specific area of road infrastructure pro
jects, based on an analysis of key directions in its development. Accordingly, special attention is paid toward potential
improvements in the PPP mechanism, as well as the methodology for evaluating PPP investment projects in the area of
As a result of this research, a new efficiency appraisal procedure for PPP projects is proposed which allows for the
influence of external factors in the evaluation of proposals. It is considered that this approach will significantly assist in
substantiating the viability and efficiency of proposed projects. In addition, the concept of a discount rate is explored,
which takes into account a proposed project’s capital structure and thus allows for a more precise estimation of the mar
ket value of capital utilised.
The appraisal procedure proposed herein has been successfully applied to the PPP road infrastructure project “Western
Rapid-Transit Diameter”. The application of the appraisal method allowed for a confirmation of the viability of this pro
ject, while also determining that the project was inefficient based on the criterion of net present value. As such, decisions
on the viability of future projects may be made based not only on the benefits to public and private partners, but on the
social importance of the projects as well. Using the proposed appraisal method, this may be achieved via an integration
of external factors, as in this case, in the form of the calculation of net present value.
Research methods utilized include: empirical and statistical research, synthesis of practical and theoretical matters, and
formal logic. Data processing and information systematisation are performed by applying the cluster method, the classi
fication method, the comparative method, and a logical and econometric analysis.
Comparative valuation is based on the market prices of similar companies and actually obtained financial results. Despite the fact that the method represents an approach which is quite easy to implement compared to the income approach, there are still some issues to be kept in mind regarding applicability of a set of multiples, accuracy of valuation, inter-country features and adjustments to be made.
An essential step in a correct and precise process of company’s valuation from both the theoretical and practical points of view is making an adequate decision about methodology choice on the basis of allowances for company’s features, market environment and economic situation. Comparative valuation is based on an analysis of several peer companies which implies existence of a mature liquid market with a bunch of players giving wide scope for determining potential analogues. Even partial violation of the basic assumption leads to a forthcoming of obstacles in using the method without detailed and complicated analysis.
It is not only the problem of choosing the right approach to a group of multiples’ definition to be faced, but also an issue of the right use of multiples: there is a group of potential factors which can affect the specifics of multiples for companies operating on the different markets. This raises the question about the need of adjusting financial variables for different countries as there are no absolutely identical markets and, thus, close analogues. Moreover, deep understanding of determinants and drivers of multiples enables researchers to evaluate a company in a more precise way through the choice of the most applicable similar firms. It is also worth mentioning that a process of valuation includes not only a company’s valuation but also a valuation quality control for further minimizing an error.
The practical complexity of comparative valuation application generates a bunch of methods and methodologies that can be implemented. This paper is dedicated to recent studies of comparative valuation through different elements of the theoretical framework including company features, market environment and country specifics.
This article describes the credit ratings of Russian and international rating agencies. It provides the description of their scales and its comparison with reference to the Russian industrial companies and financial institutions (banks and insurance companies). In addition, it was designed the table of compliance of credit rating agencies to accredit in Russia. Rating agencies deal with specific value of information rating, the assessment procedure which is carried out and the ratings of all economic entities were represented to the basic scale. With the increased attention on risk comes a growing need for better understanding its elements as well as the continuing development of ratings as a tool to manage it. In accordance to the different methodologies used by the Russian and foreign rating agencies, was determined the class of the rated of each economic entity. The credit rating market is represented by both international and national rating agencies, and the credit ratings standards can vary significantly from one agency to another. They cover credit risk analysis from both a qualitative and quantitative perspective, effectively providing insights into the role where every difference can be very important. Also, foreign rating agencies provide a strong foundation for a review of credit portfolio analytics instead of Russian ones. In this aspect, the generally accepted methods of credit rating issuers are complicated. It is often, that the rating agencies are assigned to the same company different credit ratings. This situation causes a situation of complication and can cause a conflict of interests, especially for investors and government need, so investors have to compare the ratings of these agencies for longterm purposes.
The article describes the development of the sociological and economic theories of herd behavior and discusses their applicability for the explanation of the phenomenon of herd behavior in the financial markets. This article is the second one in the series of three publications devoted to the theoretical foundations of the financial bubbles. The first article dealing with the psychological theories is published in the e-journal The Corporate Finance, vol. 13, # 1, 2010.
Herd behavior, mass psychology, Financial market, financial mania
The article analyzes the Russian market of collective investments aimed at determining what type of fund management - active or passive is the most attractive for investors. In addition, the findings have been obtained about the stability of the results of management of mutual funds over time and shown how appropriate is the use of past returns of a fund for making future investments. These and other achievements in the research disclose the specifics of the Russian market of collective investments and allow domestic investors to form a competent policy of investing in mutual funds.
There are a lot of theories that explain the company's dividend policy. Most of them confirm the relationship between dividend policy and firm value. The decision to pay dividends is affected by many factors. These factors can vary significantly from country to country. The article represents an overview of the literature on dividend policy in developed and developing capital markets. It is focused on different aspects of dividend policy in developed capital markets: the information asymmetry, taxes, the emergence of agency costs, stock repurchases as an alternative method of payout policy. The basic determinants of dividend policy in developing countries are also analyzed.
The paper presents a theoretical overview of two models: economic value added (EVA) and Edwards-Bell-Ohlson (EBO) valuation model. The core difference between these models is that EVA measures economic profit based on invested capital, whereas economic profit calculated with EBO model is based on equity value. Thereby it was hypothesized that measure of the latter model has higher explanatory power of company's capitalization and market value added than economic value added. The findings suggest that both measures have a weaker relationship with market capitalization of equity capital than accounting measures (particularly EAT). However, economic profit measure, calculated with EBO model, significantly outperforms EVA and EAT in explanatory power of MVA.
The present article contains an analysis of economical, financial and organizational leasing factoring and forfeiting nature. It is demonstrated that all these forms of financial entrepreneurship have an outsourcing component. The intermediary financing definition is proposed. The comparative analysis of these business tools has been made.
The article represents a review of the different theories of financial bubbles developed within modern financial theory. It is a concluding article in a series of three articles devoted to the theoretical foundations of financial bubbles. The previous articles are published in the e-journal The Corporate Finance, vol. 13-14, # 1-3, 2010.
Awareness of corporate value growth importance for all stakeholders as well as strengthening of intangible assets' role in the process of value creation makes it necessary to study the mechanism of intellectual capital transformation in the resulting indicators. However existing studies show poor development of methods for measuring of value created by the components of company's intellectual capital which makes analysis of the effectiveness of its use and impose limitations on value management. This paper is devoted to theoretical review and formulation of the problems for further analysis of value creation and destruction as a result of using both tangible and intangible assets.
This paper analyzes thirty-two cases including alliances, merger consortiums, acquisitions and partnerships between diverse major Italian companies in the Local Public Transportation Sector. In order to single out the principal trends, special attention has been paid to the aims of the players, their needs and the strategies implemented. The actions taken by the institutions and the competent authorities regarding the regulations have also had a very important role, mostly after the Law 422/97 (Decreto Burlando), that, by introducing transparent public selections, has forced Local Authorities to modify players' strategies to become more efficient and sustainable by promoting, liberalizing and modernizing the service. The players, accustomed to a competition-free framework, have had to face the change by M&A processes establishing alliances and collaborations, proactively redefining their positions, to ward off the threats of liberalization.