Digest FinancePub Date : 2021-09-30DOI: 10.24891/df.26.3.291
Olga D. Kosorukova
{"title":"Analyzing the Impact of Corporate Governance Factors on Enterprise Value and Capitalization","authors":"Olga D. Kosorukova","doi":"10.24891/df.26.3.291","DOIUrl":"https://doi.org/10.24891/df.26.3.291","url":null,"abstract":"Subject. The article focuses on business valuation methods and factors with reference to corporate governance principles.\u0000Objectives. I analyze how corporate governance factors influence the value and capitalization of public joint-stock companies, and make my suggestions concerning financial and administrative decisions in line with value-based management.\u0000Methods. The study is based on methods of synthesis, deduction, induction, statistical analysis, comparison and generalization.\u0000Results. Having analyzed the impact of such factors, as revenue, dividends paid, return on sale and equity, for an 11-year life span (2009–2019), on capitalization and value of the population made up of 20 Russian public joint-stock companies from four sectors, as classified by the number of owners and State interest, I figured out that capitalization enterprise value in Russia most of all depend on indicators of companies if it has 11 owners and more (71%), companies without the State interest (67%). As for basic factors, these are revenue and dividend policy that have the strongest effect on enterprise value, while capitalization depends on all the analyzable factors.\u0000Conclusions and Relevance. Currently, business valuation and business valuation management are critical for making correct strategic administrative decision. Doing so, the appraiser shall not only measure enterprise value with available financial results, but also consider its various non-financial indicators, which inter alia include corporate governance. Based on corporate governance principles set forth in the Letter of the Bank of Russia, I pointed out that definitely influence the enterprise value. Based on the above analysis, I determined what best results the Russian public joint-stock companies can attain in their corporate governance by sector, the number and quality of owners. Following the findings, I suggest how financial and administrative decisions on enterprise value management should be made, in line with the value-based management principles.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"58 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126078004","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2021-06-30DOI: 10.24891/df.26.2.170
O. V. Shimko
{"title":"Multipliers based on oil and gas production and reserves as national vertically integrated oil companies’ indicator of lucrativeness for investors","authors":"O. V. Shimko","doi":"10.24891/df.26.2.170","DOIUrl":"https://doi.org/10.24891/df.26.2.170","url":null,"abstract":"Subject. The article investigates ratios of market capitalization to production and proven reserves held by the twenty five major public oil and gas corporations within 2008 through 2018.\u0000Objectives. I trace key trends in ratios of market capitalization to production and proven reserves in major public oil and gas corporations. The article also determines what caused such transformation for the analyzable period and indicates whether such multipliers are applicable to business valuations in the oil and gas sector.\u0000Methods. I use methods of comparative, financial and economic analysis, and summarize materials of financial statements.\u0000Results. The analyzable multipliers were found to be applicable to business valuation of oil and gas corporations. If a company has oil refining and petrochemisry segments in its architecture, it will have a favorable effect on ratios. The company will also benefit if its profitability is higher than that of competitors. National companies and their indicators are seen to be influenced by the country factor, which should be taken into account for purposes of business valuation. Ratios depend on the availability of proven reserves. This aspect influences the multiplier of ratio of market capitalization to proven reserves. Therefore, it is advisable in case of similar proven reserves in comparable companies. Hence, it is more preferable to use the multiplier of the ratio of market capitalization to production.\u0000Conclusions and Relevance. It is acceptable to use the multiplier with reference to the information on production even if the profitability goes down and the debt burden increases in the listed sector of the global oil and gas industry, while the ratio based on proven reserves is more reasonable as an auxiliary indicator. The findings can be used to appraise the possible value of oil and gas assets as part of the comparable approach. They can also underlie measures for raising the market capitalization of public oil and gas companies.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"157 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117226271","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2021-06-30DOI: 10.24891/df.26.2.158
V. Belyaev
{"title":"Waves of the IPO market: The history and emergence","authors":"V. Belyaev","doi":"10.24891/df.26.2.158","DOIUrl":"https://doi.org/10.24891/df.26.2.158","url":null,"abstract":"Subject. The article considers the phenomenon of clustering in the initial public offering (IPO) market.\u0000Objectives. The aim is to perform a critical analysis of literature on the IPO market behavior and determine the optimal moment of company's listing on stock exchange.\u0000Methods. The study draws on analytical methods of information gathering and processing, as well as the comparative analysis.\u0000Results. The paper summarizes results of works by researchers on the IPO markets clustering, defines criteria for successful listing on stock exchange, unveils a number of factors affecting the market dynamics. It also determines possible ways and indicators to predict the onset of the hot issue market for initial public offerings.\u0000Conclusions. Macroeconomic factors and investor sentiment explain the clustering of IPO markets. Given that the waves in this market are of short-term nature, the macroeconomic performance is an inaccurate indicator, when predicting the onset of waves of initial public offerings, as opposed to investor sentiment. Indicators, like the reversal of the stock market from recession to growth, positive market dynamics for three months, and a period of low imputed volatility may serve as indicators of the imminent onset of a wave of initial public offerings. A successful IPO of a company operating in a particular industry may lead to an increase in the number of transactions of similar companies from this industry, provided that the stock market continues to show a positive trend during the period, which is necessary to get ready for an IPO.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130467515","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2021-06-30DOI: 10.24891/df.26.2.126
D. Tkachenko
{"title":"Corporate financial planning during the digitalization of the economy","authors":"D. Tkachenko","doi":"10.24891/df.26.2.126","DOIUrl":"https://doi.org/10.24891/df.26.2.126","url":null,"abstract":"Subject. Due to the current circumstances of the economic crisis, high competition, impact of the COVID-19 pandemic, enterprises decide to develop the digitalization of financial planning, since it will allow them to use new IT resources, quickly respond to market changes and manage their resources flexibly.\u0000Objectives. I herein study possible ways of developing the digitalization of financial planning for industrial enterprises.\u0000Methods. The study is based on methods of empirical (observation, collection and selection of facts and tracing their relationship) and theoretical research (study into the internal structure and development patterns of systems and phenomena, their interaction).\u0000Results. The article unveils what urged to start the digital transformation, and determined key challenges and avenues of the digitalization of financial planning for industrial enterprises.\u0000Conclusions and Relevance. During the crisis, financial planning should follow from the strategy to tactics. Strategic financial planning requires to look into the future of the development, understand the objective, analyze strengths and weaknesses, summarize strategic alternatives, and choose aspects for further optimization. Setting up a new financial plan to become more competitive and effective, in the current circumstances of the economic digitalization, the enterprise should convert into a new IT format, which would ensure the comprehensive nature of planning procedures, their continuity to make the system more flexible and adapt it to the production specifics in terms of the time horizon, type of production, and conditions of internal and external operations.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"94 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126077644","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2021-06-30DOI: 10.24891/df.26.2.148
M. Gorodilov, Anna A. Radevich
{"title":"On the definition of fair value for purposes of IFRS","authors":"M. Gorodilov, Anna A. Radevich","doi":"10.24891/df.26.2.148","DOIUrl":"https://doi.org/10.24891/df.26.2.148","url":null,"abstract":"Subject. This article discusses the issue of defining the Fair Value concept, its similarity and identification with the concept of Market Value. It examines the specifics of each particular value, defines the concept of Fair Value, and analyzes approaches (methods) of fair value valuation, clarifies existing problems of determining fair value for the purposes of IFRS application.\u0000Objectives. The article aims to define the notion of Fair Value and appropriate use in accounting, as well as explore approaches to assess fair value.\u0000Methods. For the study, we used a comparative analysis.\u0000Results. The article says of many inconsistencies in the valuation of fair value, starting with the lack of a clear definition of fair value in IFRS, which is actually identified with the concept of market value. It proposes a refined definition of fair value and identifies fundamental differences between fair and market values, which are based on the procedures used in their assessment.\u0000Conclusions. Fair and market values are two different types of valuation. Fair value can be the same as market value, but only if there is an active market available. There is no single concept of Fair Value presented in scientific and special literature. The same approaches are used in fair (IFRS) and market (valuation standards) assessments, but the methods described for each approach are not always the same.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114887548","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2021-03-30DOI: 10.24891/DF.26.1.44
G. Vinogorov
{"title":"Studying the profitability of the mining farm's operations","authors":"G. Vinogorov","doi":"10.24891/DF.26.1.44","DOIUrl":"https://doi.org/10.24891/DF.26.1.44","url":null,"abstract":"Subject. The article examines the profitability of the mining farm.\u0000Objectives. I determine what aspects the mining farm’s profitability should be analyzed, and articulate my own technique for analyzing, untapping the room for the profitability growth on the analyzable mining farm.\u0000Methods. To make my suggestions reasonable, reliable and substantiate them, I use the comprehensive approach to studying the profitability of the mining farm, general and special methods of research, such as the retrospective, systems and functional-structural analysis, observation, classification, instrumental techniques for grouping, sampling, comparison and generalization, factor analysis.\u0000Results. The study is the first to present the structural-logic model of the factor system of profitability of the mining farm. I assessed factors that influenced the profitability, found bottle necks and aspects to focus on in order to improve the performance of the mining farm.\u0000Conclusions and Relevance. Business entities that are residents at the Belarus Part of High Technology and have mining farms can use the proposed technique, which are of applied nature.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123148391","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2021-03-30DOI: 10.24891/10.24891/df.26.1.4
Veronika S. Vinogradova
{"title":"Event study methodology in M&A research","authors":"Veronika S. Vinogradova","doi":"10.24891/10.24891/df.26.1.4","DOIUrl":"https://doi.org/10.24891/10.24891/df.26.1.4","url":null,"abstract":"Subject. The article presents the basic principles of the event research methodology, which is one of the most popular empirical tools in corporate finance, and mergers and acquisitions.\u0000Objectives. The article introduces the main methodologies for calculating expected and abnormal returns, the main approaches for testing abnormal returns and measuring the statistical significance of the results, and it also notes the advantages and limitations of the methodology.\u0000Methods. Based on a content analysis of the top classical works in event analysis, the main algorithm and research approaches of the method are presented. The basic concept has been expanded taking into account the results of modern work aimed at improving the methodology. The applicability of the method and its relevance were verified based on the analysis of spotlight publications for 2015–2020.\u0000Results. The article provides a review of the latest developments in M&A research. It highlights the main modern trends in the application of the event analysis method. The methodology is shown to be easy to use, with market data used for analysis available in major financial databases. This allows for empirical research with a large sample of securities. In addition, stock prices reflect the direct expectations of investors and best reflect the value created by the event when compared to financial statement analyses that are often misstated.\u0000Conclusions and Relevance. It is concluded that the event analysis method remains the key methodology in the field of mergers and acquisitions and is actively used by researchers. Improved econometric approaches allow for increased statistical significance and more accurate results.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"40 8","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120927560","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2021-03-30DOI: 10.24891/DF.26.1.53
A. Molotkov
{"title":"The estimation of inflation-adjusted earnings to stock value ratio","authors":"A. Molotkov","doi":"10.24891/DF.26.1.53","DOIUrl":"https://doi.org/10.24891/DF.26.1.53","url":null,"abstract":"Subject. The study discusses the dependence of estimates of the fundamental stock value (based on the earnings-price ratio) on the expected inflation.\u0000Objectives. I determine the type and parameters of such dependence.\u0000Methods. The research is based on methods for estimating the stock value and regression analysis to define the parameters of the suggested model.\u0000Results. For the US stock market (S&P 500 index), it is shown that earnings-price ratio for the earnings averaged over 10 years has a significant positive correlation with the indicator chosen to characterize the expected inflation. It is substantiated that the main reason is the impact of the expected inflation on the real determinants of the fundamental value, primarily on the risk premium. Conditions are formulated under which Gordon's formula can be used to determine the type of relationship between the fundamental stock value and its determinants for a time series of observations with a changing real discount rate.\u0000Conclusions. The model is suggested for estimating the fundamental stock value based on the linear relationship between the earnings-price ratio and inflation., and its parameters are determined. The adequacy of the model is confirmed empirically for the US stock market. The findings can complement investor’s decision-making methods in the stock market.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116174859","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2021-03-30DOI: 10.24891/DF.26.1.67
M. Dorofeev, M. K. GRIBAN'
{"title":"Controversies of Islamic finance","authors":"M. Dorofeev, M. K. GRIBAN'","doi":"10.24891/DF.26.1.67","DOIUrl":"https://doi.org/10.24891/DF.26.1.67","url":null,"abstract":"Subject. The article focuses on discrepancies in Islamic finance, the construct of Islamic finance, its profit-generation mechanism, economic effects, unique nature and competition with traditional financial institutions.\u0000Objectives. We analyze the Islamic economic model and perform the comparative analysis of Islamic and traditional financial instruments. We also investigate conflicting issues of Islamic finance.\u0000Methods. The study involves methods of comparison, deduction, economic analysis and graphic interpretation.\u0000Results. We analyze the Islamic economic model to point out some fundamental principles of the Islamic economy, and its strengths. The article overviews types of Islamic financial instruments, compares them with traditional finance. The practical part of the study compares annual financial statements of the Abu Dhabi Islamic Bank and Russia’s Sberbank. We unfold the profit-generating mechanism of Islamic financial institutions and discover discrepancies in Islamic finance.\u0000Conclusions and Relevance. Having compared Islamic and traditional finance, we revealed some similar and different aspects. We discovered discrepancies in Islamic finance that translate into the overall nature of the Islamic economy and the performance of the Islamic financial institution above. The findings can be used for further studies into Islamic finance and outlining Islamic banking development strategies at the governmental level. Furthermore, the findings may come in handy to professional and non-professional market actors for making investment decisions.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130980227","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digest FinancePub Date : 2020-12-25DOI: 10.24891/df.25.4.366
N. Lyubushin, N. E. Babicheva, O. Kupryushina, D. I. Khanin
{"title":"Setting up a methodology for evaluating, analyzing and predicting the sustainable development of economic agents amid Grand Challenges","authors":"N. Lyubushin, N. E. Babicheva, O. Kupryushina, D. I. Khanin","doi":"10.24891/df.25.4.366","DOIUrl":"https://doi.org/10.24891/df.25.4.366","url":null,"abstract":"Subject. Mentioned in the Strategy for Scientific and Technological Development of the Russian Federation, Grand Challenges entail difficulties, threats and opportunities for the national development. The complicated nature, scale of problems and threats cannot be addressed, eliminated or resolved by multiplying resources consumed. This aspect should be taken into consideration in evaluating, analyzing and predicting the sustainable development of economic agents operating amid grand challenges.\u0000Objectives. We outline a methodology for a set of methods used to evaluate, analyze and predict the sustainable development of economic agents operating amid grand challenges.\u0000Methods. The methodological framework comprises the resource-based approach, which we set up and tested when conducting the economic analysis of the sustainable development of economic agents.\u0000Results. The article produced an algorithm for evaluating, analyzing and predicting the sustainable development of economic agents operating amid grand challenges. We determined sustainable development indicators throughout hierarchical levels and thresholds based on the Fibonacci numbers, which satisfy the sustainable development amid grand challenges.\u0000Conclusions. There should be a set of subjective, industrial and technological indicators to monitor the performance of national programs and strategies and governance of economic operations, since such indicators could help gauge the impact of the grand challenge throughout its phases. The proposed algorithm will amplify the economic analysis methodology and highlight partial and integrated indicators measuring reserves and new operational environment of economic agents in the time of grand challenges.","PeriodicalId":111899,"journal":{"name":"Digest Finance","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130064107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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