The paper contains highlighting and theoretical level analysis of the factors positively and negatively influencing profitability of vertically integrated and non-integrated companies. Advantages and disadvantages of choosing the strategy of vertical integration are proved along with systematization of main approaches to these item researching. The difference of the efficiency between the integrated and non-integrated companies’ performance is considered, which is the key issue of the best way of large companies development. The central issue of the research, that is based on the theory highlighted in this paper, is the utility of existence of large vertically integrated companies in emerging capital markets. Are such companies improving the whole economy of an emerging country or are they slowdown transition to market relations in all industries? This article was motivated by the trend in developed capital markets towards dividing big holding companies to small segmental units.
The efficiency of vertically integrated companies’ performance should be studied through comparison the whole corporation and a set of detached businesses, that could be parts of integrated company. The simplest way of such analysis, which was used by the first researchers in this field, is to compare total costs and to depict different types of economies. On the more sophisticated level of analysis must be taken into account such issues as principal-agent problem, technological economies and risk level minimization under the conditions of legal restrictions, which limits costs saving between two branches of one company. The third approach to consider all influencing companies’ performance factors is the analysis of financial figures, especially the analysis of different ratios, that can show relative efficiency of companies. By doing such analysis not only traditional components of synergetic effect are taken into consideration, but also financial features of M&A deals that can lead to a bankruptcy are covered.
This article is devoted to the decision-making mechanism of vertical integration at a company level. Different approaches to the analysis of vertical integration transactions, which exist for today, are revealed. The estimation of existing ways of the analysis is given, relationships between the various factors, which influence the general result of vertical integration transactions, are determined. In the article the recommendations for the Russian car industry are given on the basis of the review of the vertically integrated companies, which exist for today, the mathematical model is described, which explains the logic of the firm's decision of integration.
The paper presents the results of dynamic trade-off empirical testing on the data of 30 countries for 2005-2010. The authors show that the speed of adjustment to the target capital structure for Western Europe countries is mostly determined by internal factors. Meanwhile for emerging capital market the growth rate of GDP as well as time dummy variables are crucial determinants of speed of adjustment. Institutional factors such as credit and bankruptcy institutions developments revealed nonlinear relationship with the speed of adjustment. Moreover, investor protection developmens is also a significant determinant that exhibits positive relationship for both developed and emerging markets.
The paper represents the results of empirical testing of market reaction at the announcements on takeovers at Russian and European financial markets. It contains an attempt to reveal the differences in market reactions between both friendly acquisitions and hostile takeovers, and European and Russian markets. On the base of the study, the authors conclude that the difference in the reaction at the information on friendly acquisitions and hostile takeovers is significantly valuable for all the markets. The information on hostile takeovers causes the negative reaction elsewhere, but its impact at the Russian market is stronger than the European ones. In addition, the authors examine the features of the deals and the acquiring companies, and their relationship with the cumulative abnormal returns caused by acquisitions. The study is performed by event studies and regression analysis. The sample consists of 220 announcements of 93 public companies from Russia and 6 European countries from different sectors of economy for the period of 2006–2015.
The article gives an overview of influence of stock market discrimination on market value of companies in China. There are two types of shares on Chinese stock market: class A shares, which are available for domestic investors, and class B shares, which are available for foreign investors. Such market structure is not a unique Chinese market's feature. It is also used in such countries as Finland, Singapore, Switzerland, Thailand, etc. What differs Chinese market from markets with similar structure is the fact that class B shares are traded with substantial discount to class A shares. Such a situation is explained by such factors informational asymmetry between domestic and foreign investors; different liquidity of different classes of shares; diversification effect, connected with investment in Chinese stock market; size of companies; ratio of amounts of shares of different classes; stock exchange where company's shares are traded.
Current article is an overview of models of influence of intellectual capital over the corporate financial decisions, as a main factor, influencing the value of firms. The importance of intellectual capital has dramatically increased with the transition to the knowledge economy. Inclusion of factors of intellectual capital into the models of corporate financial decisions is a way to increase the quality of analysis. Despite the fact that the influence of the intellectual capital on firms and corporate financial decisions in developed markets of the USA and the Western Europe is a proven fact, the evidence from the emerging markets is still scarce. Current researches of corporate financial decisions rarely include intellectual capital as a factor. Current article demonstrates the results of inclusion of these factors. Results of analysis of early works show negative relationship between intellectual capital and both the level of financial leverage and dividend payout ratio. However, more recent research, considering the efficiency of utilization of intellectual capital, shows that relationship between the efficiency of utilization of intellectual capital and the level of financial leverage is positive. At the moment there is no direct empirical evidence of relationship between the efficiency of utilization of intellectual capital and the dividend policy.
Shareholder conflict may significantly impact market capitalization of a firm because of rising risk of additional reputational costs. In this paper we analyze changes in value of Russina telecommunication company Vimpelcom after mass media announcements about developments in lawsuits between major shareholders in 2005-2013. We suggest methodology of prediction of market reaction. All announcements are classified according to several characteristics. Calculation of abnormal return allowed us to estimate cumulative losses of shareholders of Vimpelcom due to the conflict between Altimo and Telenor.
This paper contributes to understanding the relationship between insider ownership and investment performance in emerging markets measured by marginal Tobin’s Q. We will attempt to separate the positive wealth effect of managerial ownership from the negative entrenchment effect. The research analyses other determinants of corporate investment performance: institutional ownership, firm size and R&D intensity. The study was conducted on the sample of companies of Brazil, Russia, India and South Africa over 4-year period, 2009-2012.
Both, business and academic communities agree that corporate news do affect the company market value. Empirical data shows that once released in the open, corporate news often lead to a rather predictable investor reaction. This investor reaction depends on a great number o factors: whether the news is good or bad, what type of corporate event has lead to the news, how broad is the analyst coverage of the company, what were the preceding company and analyst forecasts, prevailing stock market dynamics at the time, type of company shares, and a dozen of other factors. In our work, we attempted to put together disjoint empirical data, filter out the most significant common factors, determine their influence on the company value, and come up with a coherent big picture. Thereby we have developed a conceptual model that describes what kind of news and under what conditions will influence the company stock price this way or the other. We also propose a qualitative methodology for estimating the influence of news on the stock price. Our model and methodology are meant to help companies to better anticipate market reaction to their corporate announcements, and therefore correct possible negative impact leading to overall more efficient value based management.