The topic of payout policy significance in terms of value creation has been developing for 50 years already. This development has led to the establishment classic theories that explain different patterns in the companies’ payout policy choices: signaling, agency costs theory, clientele theory and catering theory. However, tests results are not always consistent among different authors, which means that these theories cannot be used universally. Classic theories assume that all agents on the market are fully rational, which is rather unrealistic. These two facts led to the development of behavioral explanation of the payout policy choice. This approach focuses on the behavioral characteristics of managers that are responsible for the decision-making process in the company. Thus, the payout policy according to this approach is considered as the function of behavioral characteristics of managers (overconfidence, optimism, risk preferences, etc.) rather than the function of the financial variables.
This particular article is the review of researches that cover classic and modern theories of payout policy. The article covers the logic of the development of different views on the payout policy. The author covers articles that test different theories, analyzes main results and conclusions, investigates the reasons for the development of these theories. The main focus has been made on the behavioral approach which is considered as the most fruitful direction for the future research. The authors also cover the methodology of existing papers, variables that measure behavioral characteristics and results.
There is a common opinion in Russian business practice that writing business plans is an easy task with the help of COMFAR or Project Expert softwears, and it is not a big deal to compare different business plans once project financial summaries are available. However, one crucial issue is missing in such approach. Business-plan is an intellectual product, reflecting private investor interests, skills and experience. It is also a perishable product as its financial summaries are based on current economic assumptions. Tomorrow there will be new assumptions and accordingly new business plan summary is required. As such, private business implementation of modern technologies, best business practices and environment protection are among the most important criteria in state budget financing process but not a formal benchmarking of investment plans.
This paper reports the results of foreign surveys with respect to the use of capital budgeting techniques by Chief Financial Officers (CFOs) in different countries. Also this paper analyses different factors and conditions which affect the choice of capital budgeting technique.
This paper is concerned with stock liquidity as a factor in making capital structure decisions by managers of Russian firms. Although a big number of studies on capital structure occurred over the last few decades, stock liquidity has only recently attracted scholars’ attention as a possible driver for the choice of capital structure. Yet the existing papers are based on data from the developed capital markets. The latter differ substantially from the Russian market in terms of institutional environment and more liquid stocks. Against the background of revisions in the Russian clearing system that are expected to boost liquidity of stocks, this paper gains in currency.
The theoretic mechanisms behind the interplay of stock liquidity and capital structure are discussed in previous studies. Lower stock liquidity is associated with higher transaction costs and informational asymmetry, and thus with higher required return. Therefore it is assumed that the managers aiming at firm value maximization would prefer debt to equity financing in case if stock is not liquid enough. There are also theoretic grounds to expect an opposite impact of capital structure on stock liquidity.
The presented article describes the justification of major reasons for securitization, followed by the history of future-flow securitizations by the developing countries and the evaluation of the potential for each asset class. Given the sharp rise in workers' remittances to developing countries in recent years and concerns that such flows may not really be good for the recipient countries, the article then examines the role that securitization can play in magnifying the development impact of remittances. In conclusion there is a description of the constraints that inhibit the issuance of debt backed by future-flow receivables and an exploration of the remedial role for public policy.
Regarding today’s unstable economic situation the issue of correctly evaluation of existing financial statements of the company and forecasting it`s development potential is very important both for the company and for the rest of the market players. Within the framework of this research the evaluation of the bankruptcy probability of the company in the oil and gas sector has been considered. For now oil&gas sector remains the most stable and conservative due to the specific end products produced and business organization model. In the meantime there are some relatively small (comparing to the transcontinental companies) oil&gas companies, which business is not under governmental insurance or under the shelter of the host company. For such companies, sustaining financial stability is a real challenge. That is why economic shocks often conduce their bankruptcy.
The determinants of the bankruptcy probability in this research were the following financial data: profitability, liquidity, financial leverage, turnover ratio. Theoretical analysis has proven that financial leverage correlates with the other model data (marketability, liquidity and the turnover ratio). This issue has been proved through data output. The highest was correlation between financial leverage and liquidity (34%). Changing this variable to its own deviation from the industry mean (taking absolute value) the problem of multicollinearity has been solved. However, according to the model results, this variable only slightly affects the bankruptcy probability. Over all profitability has the most magnitude, which corresponds the other researcher’s conclusion: stable company can be characterized through high liquidity, high profitability and low financial leverage deviation from its standard. So that the empirical analysis has shown, that test hypothesizes can be executed on the principal variables (profitability, liquidity and financial leverage). Such variable as rate of income tax indicates the social-economic development of the country, in which the company operates, than a factor of bankruptcy.
This article is the first part of the historical review of the occurrence and development of concep- tual approaches to measuring goodwill in economic science since the end of the 19 century to the 70-ies of 20 century. The problem of goodwill measurement arose in economic science at the end of the 19th century and still discussed in the academic and practitioner communities around the world. Despite numerous studies and the adoption of accounting standards issued by various pro- fessional organizations internationally, existing opinions on this issue vary and change frequently. The need to preserve the established recognition criteria, on the one hand, and the need to provide useful information, on the other, has led to a number of controversial issues in the measurement and recognition of goodwill. In the study we analyze the historical experience in the form of goodwill perceptions, identifying historical patterns suitable for improvement of modern theory and practice of measuring goodwill. Methodological basis of the study consists of the works of distinguished sci- entists in the fields of accounting, international and generally accepted standards of accounting and reporting. The authenticity of the author’s findings confirmed by a logical use of scientific methods such as historical-and-comparative, historical-and-typological and historical-and-system method. The author track back the transformation of methods of measuring goodwill in academic research and normative documents of the nineteenth and twentieth centuries. Separate section is devoted to modern concepts of goodwill measurement, which represents an alternative to the existing account- ing standards. а gradual, cumulative and cyclical process of development of methods for measuring goodwill was identified. We found that in periods of economic growth the paradigm of current value usually dominates, while in periods of recession the historical cost paradigm is rolled back.
This article is the second part of the historical review of the occurrence and development of conceptual approaches to measuring goodwill in economic science since the 70-ies of the 20 century to the present. The problem of goodwill measurement arose in economic science at the end of the 19th century and still discussed in the academic and practitioner communities around the world. Despite numerous studies and the adoption of accounting standards issued by various professional organizations internationally, existing opinions on this issue vary and change frequently. The need to preserve the established recognition criteria, on the one hand, and the need to provide useful information, on the other, has led to a number of controversial issues in the measurement and recognition of goodwill. In the study we analyze the historical experience in the form of goodwill perceptions, identifying historical patterns suitable for improvement of modern theory and practice of measuring goodwill. Methodological basis of the study consists of the works of distinguished scientists in the fields of accounting, international and generally accepted standards of accounting and reporting. The authenticity of the author’s findings confirmed by a logical use of scientific methods such as historical-and-comparative, historical-and-typological and historical-and-system method.
The author track back the transformation of methods of measuring goodwill in academic research and normative documents of the nineteenth and twentieth centuries. Separate section is devoted to modern concepts of goodwill measurement, which represents an alternative to the existing accounting standards. А gradual, cumulative and cyclical process of development of methods for measuring goodwill was identified. We found that in periods of economic growth the paradigm of current value usually dominates, while in periods of recession the historical cost paradigm is rolled back.
The development of information technologies, increase of the knowledge significance, the vital importance of innovation as the tool to obtain the competitive advantage issue new and complex challenges to modern companies in many aspects of their business. One of such issues is the adequate information disclosure about the intellectual capital of the company to satisfy the inside and outside stakeholders, such as: management of the company,employees, investors, government, credit institutions and many others. It is necessary to note that information disclosure is particularly relevant to companies in emerging markets due to their inefficiency, which often leads to inadequate assessment by stakeholders. This paper presents the non-financial evaluation of the intellectual capital disclosure by the cumulative method (intellectual capital disclosure index). This index is used as the fundamentally different analytical tool to investigate the information disclosure of intellectual capital by the means of empirical panel data analysis, in order to evaluate the systematical contribution of intellectual capital into value creation of the companies of the largest developing countries. The paper is organized as follows: in the first part it provides a brief academic overview of the definitions and classifications of intellectual capital, methods of evaluation. The intellectual capital impact on the value of companies is also briefly discussed in this part of the paper. The index regression model of the impact of intellectual capital disclosure on the value is discussed in the second part of the paper. Finally, main results and conclusions of the research and recommendations for further development of the topic are presented. The study describes the disclosure of information on intellectual capital of the companies in emerging markets (Brazil, Russia, China, South Africa), the main finding is that the disclosure of such information contributes to the growth of the value of the company, because it allows stakeholders to evaluate it adequately.
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.