scholarly journals Assessment of the investment attractiveness of companies based on classification trees

2021 ◽  
pp. 43-60
Author(s):  
Anna U. Kosobutskaya ◽  
Mikhail A. Surzhin ◽  
Annie V. Ravohanginirina
Keyword(s):  
Classification Trees ◽  
Debt Financing ◽  
Suggested Method ◽  
Economic Activities ◽  
Leverage Ratio ◽  
Enterprise Value ◽  
Pig Farming ◽  
Short Term Investment ◽  
Cart Algorithm

Introduction. The effectiveness of investment decisions depends directly on the accuracy of the assessment of the investment attractiveness of an organisation performed by the investor. One of the ways to assess the investment attractiveness of a company is by using the indicators of enterprise value (EV). However, they do not guarantee accuracy when assessing the investment attractiveness of specific companies. As a result, such companies can be either overvalued or undervalued. This happens because EV does not take into account the specifics of the industry, the specifics of the smaller segments within the industry, and the specifics of economic activities in a particular region. Purpose. To determine the EV indicators which can be used for the accurate assessment of the investment attractiveness of companies operating in a particular industry. Methodology. In our study, we used a Classification and Regression Trees (CART) machine learning method. Results. The article presents the results of a comparative analysis of EV indicators used to assess the investment attractiveness of companies that can be found in scientific literature and bank references. We suggest that the EV indicators used to assess the investment attractiveness of companies should be calculated based on the analysis of the industry’s statistics using the CART algorithm. EV indicators should be determined by maximising the reduction of heteroscedasticity with regard to the investment potential. To test the suggested method, we used it to calculate the required current liquidity ratio, quick liquidity, the leverage ratio, and the long-term debt financing for pig farming enterprises in the Voronezh, Belgorod, Kursk, Lipetsk, and Tambov Regions. Conclusions. The study demonstrated that the classification trees method is the most accurate in calculating the EV indicators for assessing the investment attractiveness of companies operating in a particular industry. The suggested method proved to be the most accurate in predicting all the financial coefficients for pig farming enterprises. Thus, the leverage ratio (0.35) and the concentration of borrowed capital (0.65) proved that pig farming enterprises in the Voronezh Region should be financed by borrowed capital. The long-term debt financing ratio was 0.49. The assessment of the short-term investment potential of pig farming enterprises should be more precise, since the current liquidity and quick liquidity ratios are high: 2.73 and 1.44 respectively.

Corporate social responsibility and debt financing of listed firms: a quantile regression approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kofi Mintah Oware ◽  
T. Mallikarjunappa
Keyword(s):  
Quantile Regression ◽  
Debt Financing ◽  
Short Term ◽  
Content Type ◽  
Leverage Ratio ◽  
Listed Firms ◽  
Conditional Mean ◽  
Natural Logarithm ◽  
Corporate Social

Purpose The purpose of the study is to examine the effect of corporate social responsibility (CSR) on debt financing (natural logarithm of debt and leverage ratios) of listed firms. Design/methodology/approach Using content analysis for data extraction, the study examines listed firms on the Bombay Stock Exchange (BSE) from 2010 to 2019 financial year. It uses a quantile regression and panel fixed effect regression as the model's application. Findings The study shows that CSR expenditure has a positive and strong correlation with debt financing (i.e. natural logarithm of long-term and short-term debts). The first findings show that CSR expenditure has a negative and statistically significant association with total leverage ratio, using conditional mean and median percentile. However, there is a positive and statistically significant association between CSR expenditure and long-term leverage ratio at the 25th and 50th percentile. The second findings show that CSR expenditure has a positive and statistically significant association with long-term debt but an insignificant association with short-term debt and total debt under a conditional mean average. The application of quantile regression addresses the values that fall outside the confidence interval and therefore document a positive and statistically significant association between CSR expenditure and debt financing (short-term debt, long-term debt and total debt) at the 25th, 50th and 75th percentile. Originality/value The introduction of quantile regression gives a novelty in CSR and debt financing study, which to the best of the authors’ knowledge, has not received any attention. Similarly, firms have better information on how to position their CSR expenditure to attract providers of debt financing.

Research on the Economic Organization Environmental Impact

2017 ◽  
Vol 68 (3) ◽  
pp. 599-601
Author(s):  
Dan Paul Stefanescu ◽  
Oana Roxana Chivu ◽  
Claudiu Babis ◽  
Augustin Semenescu ◽  
Alina Gligor
Keyword(s):  
Economic Activity ◽  
Economic Organization ◽  
Economic Activities ◽  
Environmental Implications ◽  
Minimal Impact ◽  
Wide Range ◽  
Material Environment ◽  
Negative Effect ◽  
Harmful Effects

Any economic activity carried out by an organization, can generate a wide range of environmental implications. Particularly important, must be considered the activities that have a significant negative effect on the environment, meaning those which pollute. Being known the harmful effects of pollution on the human health, the paper presents two models of utmost importance, one of the material environment-economy interactions balance and the other of the material flows between environmental factors and socio-economic activities. The study of these models enable specific conditions that must be satisfied for the economic processes friendly coexist to the environment for long term, meaning to have a minimal impact in that the residues resulting from the economic activity of the organization to be as less harmful to the environment.

scholarly journals COVID-19 and Its Impact on the Indian Economy

2021 ◽  
pp. 097226292198912
Author(s):  
Vikas Barbate ◽  
Rajesh N. Gade ◽  
Shirish S. Raibagkar
Keyword(s):  
Oil Prices ◽  
Economic Activities ◽  
Short Term ◽  
Indian Economy ◽  
The Great Depression ◽  
Windfall Gain ◽  
Crude Oil Prices ◽  
Tree Approach ◽  
Silver Lining

Pessimism looms large all over. COVID-19 has been projected as worse than the Great Depression of 1930. Everyday analyst and agency reports are diving into new bottoms of a fall-down in economic activities. Indian economy, however, has a slightly different story to tell at this hour of crisis. The silver lining for the Indian economy comes from a steep fall in the crude oil prices from around $70 per barrel to a record 18 years low of $22 per barrel. This windfall gain can, to some extent, offset the direct losses due to COVID-19. At the same time, dreams like a $5 trillion economy no longer look even a remote possibility. This article takes stock of the likely impact of COVID-19 on the Indian economy in the short term and the long term. A decision-tree approach has been adopted for doing the projections.

Mitigating Legal Risks in Nigeria's Project Finance Market

2017 ◽  
Vol 25 (3) ◽  
pp. 442-455
Author(s):  
Olufemi Soyeju
Keyword(s):  
Debt Financing ◽  
Project Finance ◽  
Infrastructure Development ◽  
Public Infrastructure ◽  
The Public ◽  
Fund Development ◽  
Legal Risks ◽  
Project Risks ◽  
Infrastructure Project

Project finance is a subset of financial techniques used traditionally in raising long-term debt financing for projects particularly in the energy and mining sectors of the economy. However, over the years, it has proved helpful in raising the required funds to drive public infrastructure projects through the public private partnership framework. By its nature, project finance is either non-recourse, or of limited recourse, to the project sponsors and hence identifying the various risks and determining who should bear these risks is the overarching essence of project finance technique. These uncertainty and risks may have significant impact on outturn costs or benefits of a particular infrastructure project. Generally, typical project finance transaction is fraught with many project risks which sometimes overlap. However, among these inherent risks there are some that are legal in nature and hence they are referred to as legal risks. So, this article seeks to interrogate the related legal risks in project finance as a financing technique to fund development of infrastructure and in particular, the procurement of critical public infrastructure assets in Nigeria and the various ways by which these risks can be mitigated to drive infrastructure development in the country.

Debt financing puzzle and internationalization

2019 ◽  
Vol 13 (1) ◽  
pp. 33-56 ◽  
Author(s):  
Karren Lee-Hwei Khaw
Keyword(s):  
Multinational Corporations ◽  
Emerging Market ◽  
International Perspective ◽  
Debt Financing ◽  
Primary Concern ◽  
Firm Risk ◽  
Content Type ◽  
Financial Decisions ◽  
Business Operations

PurposeThis study aims to examine the relation between long-term debt and internationalization in the presence of the agency costs of debt and business risk.Design/methodology/approachSample firms consist of 517 non-financial listed firms in Malaysia, with 4,197 firm-year observations from the year 2000 to 2014. This study uses panel data regressions and a series of robustness tests to examine the hypotheses.FindingsThe results show that multinational corporations (MNCs) are more likely to sustain less long-term debt than domestic corporations (DCs) to mitigate the costs related to agency problem and firm risk. Meanwhile, foreign-based MNCs maintain less long-term debt than local-based firms, and the finding is more significant at a higher degree of internationalization. Robustness tests confirm the negative relations.Research limitations/implicationsThe findings indicate that the ongoing debate on the debt financing puzzle can be explained by internationalization. Moreover, the findings suggest that in addition to the systematic differences between MNCs and DCs, studies on the debt financing and internationalization should also account for the systematic differences among MNCs such as the local-based MNCs, foreign-based MNCs and DCs that later expand their business operations abroad.Practical implicationsMNCs have to be responsive to the diverse institutional environments as they diversify their business operations geographically. When the adverse effects of internationalization outweigh the benefits, MNCs could use the long-term debt financing decision to mitigate the costs of doing business abroad. This is because debt financing is also a primary concern in the corporate financial decisions for the maximization of shareholders’ wealth.Originality/valueThis study contributes to the debt financing literature from the international perspective by providing evidence from an emerging market. In addition, this study highlights the importance of recognizing firms by their firm-specific characteristics, such as internationalization, given the systematic differences among firms.

scholarly journals Global economy interacts with climate change to jeopardize species conservation: the case of the greater flamingo in the Mediterranean and West Africa

2011 ◽  
Vol 39 (1) ◽  
pp. 1-3 ◽  
Author(s):  
ARNAUD BÉCHET ◽  
MANUEL RENDÓN-MARTOS ◽  
MIGUEL ÁNGEL RENDÓN ◽  
JUAN AGUILAR AMAT ◽  
ALAN R. JOHNSON ◽  
...  
Keyword(s):  
Climate Change ◽  
Global Economy ◽  
World Economy ◽  
Species Conservation ◽  
Price Volatility ◽  
Economic Activities ◽  
Anthropogenic Habitats ◽  
Recent Financial Crisis ◽  
Economic Use

The conservation of many species depends on sustainable economic activities that shape their habitats. The economic use of these anthropogenic habitats may change quickly owing to world trade globalization, market reorientations, price volatility or shifts in subsidy policies. The recent financial crisis has produced a global impact on the world economy. How this may have affected the use of habitats beneficial to biodiversity has not yet been documented. However, consequences could be particularly acute for species sensitive to climate change, jeopardizing long-term conservation efforts.

scholarly journals Environment and Potential Affecting Investment Decision for Accommodation Business: Case of Less Visited Area in Samut Songkhram and Phatthalung Province

2021 ◽  
Vol 58 (2) ◽  
pp. 1706-1717
Author(s):  
Krisada Sungkhamanee, Piyadhida Sungkhamanee
Keyword(s):  
Financial Literacy ◽  
Investment Decision ◽  
Investment Decisions ◽  
Business Case ◽  
Potential Factors ◽  
Short Term Investment ◽  
The Impact ◽  
Moderating Role

Investment decisions have great importance in different sectors of various countries and these decisions are the basis on which the outcomes of the investments are based. However, there might be certain factors that might lead to the incorrect long term and short term investment decisions. In this regard, the current study has been conducted with the core motive to explore the impact casted by the environment and potential factors i.e. salience and overconfidence on the long term investment decisions for accommodation business along with the moderation of a variable i.e. financial literacy. To fulfill this objective, the researcher has collected data from the investors of accommodation businesses in Thailand. The collected data has been subjected to different statistical techniques and tools for analysis purpose and the results have been obtained. The results obtained by the analysis of the collected data indicate that salience and overconfidence have significant impact on the long term investment decision. In addition, the moderating role of financial literacy has also been found as significant in the study. The results suggest that the investors of the accommodation business must consider the aspects of salience and overconfidence before taking any long term investment decision to avoid failure of the investment decision.    

scholarly journals A Framework for Property Developers to Survive in a Recession

10.29007/cfr2 ◽  
2018 ◽  
Author(s):  
Zunoon Parambath ◽  
Nilupa Udawatta
Keyword(s):  
Survival Strategies ◽  
Economic Activities ◽  
Short Term ◽  
Property Development ◽  
Market Shares ◽  
Negative Impacts ◽  
Set Up ◽  
High Level ◽  
Property Developers

Recession is considered as a major threat to the economy as it slows down economic activities. The property development sector is extremely responsive to these economic conditions. Thus, it is crucial to understand causes, effects and strategies for property developers to survive in a recession without any ill effects. Thus, this research aimed to develop a framework for property developers to identify appropriate survival strategies in recession. A comprehensive literature review was conducted in this research to achieve the above mentioned aim. The results of this study indicated that recession prompts negative impacts on property development sector resulting in unemployment, lower demand, production and revenue, decline in resources and high level of competition. According to the results, the survival strategies were classified into short-term and long-term strategies. The short term strategies include: implementing management tactics, cut down of operating costs, keeping financing lines set up, timely repayment of debts, setting vital new objectives for the future, undertaking shorter time span developments, specialisation in favoured market, renegotiating deals and contracts. The long-term strategies include retrenchment, restructuring, investment and ambidextrous strategies. Similarly, attention should be paid to predict any changes in the economic environment that can influence property development activities and it is necessary to carefully evaluate investment activities to increase sales, profits and market shares of property developers. Preparing for a crisis is doubtlessly the ideal approach as it can facilitate both survival and growth. Thus, the property developers can implement these suggested strategies in their businesses to enhance their practices.

scholarly journals How Does Debt Financing Affect Financial Performance? A Study of Transport Companies Listed in Pakistan

2020 ◽  
Vol 2 (2) ◽  
Author(s):  
Ulfat Abbas ◽  
Sohail Aziz ◽  
Samina Khan
Keyword(s):  
Financial Performance ◽  
Debt Financing ◽  
Annual Reports ◽  
Transport Sector ◽  
Return On Assets ◽  
Secondary Sources ◽  
Earnings Per Share ◽  
The Impact ◽  
Retained Earnings

  Purpose: The purpose of this paper investigates the impact of debt financing on airline’s (transport) sector performance of Pakistan. Design/Methodology/Approach: We gathered the data from secondary sources. In this study, we used a data sample of 11 years from 2008-2018 by using companies annual reports. Due to unavailability of data, only 3 transport companies have been taken for analysis. The software which we used in analysis is SPSS (Statistical Package for Social Science). Findings: The findings of the study suggests that there is opposite relationship between debt financing and financial performance of airlines. Debt is measured from three ratios, short term debt to total assets, long term debt to total assets and total debt to total assets ratio. For the measurement of performance, we used return on assets and earnings per share. We concluded on the basis of findings that the companies should focus on retained earnings which is cheaper source of finance and use less level of debt. As the more level of debt use by the companies, the performance of companies’ decrease. Implications/Originality/Value: There is only one study is available in Pakistan which used transport sector in Pakistan in debt financing context                                                          

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