Assessing the Impact of Country Risk on the Investment Attractiveness of Russian Companies

2021 ◽  
Vol 28 (6) ◽  
pp. 30-42
Author(s):  
K. L. Polyakov ◽  
M. V. Polyakova ◽  
M. I. Vasilevskiy
Keyword(s):  
Objective Assessment ◽  
Economic Value ◽  
Value Added ◽  
Country Risk ◽  
Risk Level ◽  
Success Factor ◽  
Local Market ◽  
Economic Value Added ◽  
Business Valuation ◽  
The Impact

The ability to attract foreign direct investment (FDI) is a critical success factor for the development of any participant in the local market. One of the indicators that characterize the investment attractiveness is the economic value added (EVA). It reflects the market assessment of the company's profit potential. Some EVA assessment methodologies include the country risk assessment – a factor that is beyond control. This study analyzes the impact of this indicator on the investment attractiveness of an organization. The authors estimated the economic value added for some of the largest Russian companies using methodologies that take into account the country's risk level, as well as those methodologies that do not take it into account. The calculations used adjustments for EVA in line with specific features of Russian accounting. As a result, it was revealed that, regardless of industry affiliation, the investment attractiveness of Russian organizations decreases when the country's risk factor is included in its assessment.The article justifies the relevance of the developed approach to the assessment of investment attractiveness of companies based on country risk level as a factor that impacts the ability of organizations to generate profit, making it possible to detect hidden management problems. According to the authors, the application of this approach not only contributes to the solution of long-term and medium-term tasks of business development (for example, the creation of its infrastructure) but also greatly facilitates the entry of organizations into international markets.One of the authors' conclusions of the study is that using the methodological tools developed by them for analytical purposes requires improving the management of the investment attractiveness of an organization and, consequently, its objective assessment. The structure of economic value added can serve as a basis for making management decisions related to increasing investment attractiveness. According to the authors, the provisions formulated in the article can serve as a methodological guide for organizing business valuation based on the EVA in the Russian context. Results of the study can be of interest to managers, current owners of companies, and potential investors.

scholarly journals A Brief Overview of the IPO Valuation Methods

2020 ◽  
Vol 15 (12) ◽  
pp. 41
Author(s):  
Olga Ferraro
Keyword(s):  
Cash Flow ◽  
Initial Public Offering ◽  
Professional Practice ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
Discounted Cash Flow ◽  
Business Valuation ◽  
Valuation Methods ◽  
Public Offering

The method adopted for pricing in an Initial Public Offering is a key issue in the studies on business valuation. In particular, various researches sought to verify which valuation methodologies are preferable in the context of an initial public offering. The review of the main literature shows that Discounted Cash Flow, Market Multiples, Dividend Discount Model and, even if just to some degree, Economic Value Added are the most popular methodologies in the valuation practice. The comparison among different valuation methods, proposed in the literature and variously applied in national and international practices, reveals the necessity to pay more attention to valuation mechanisms that drive the pricing of the shares to be listed. The topic is linked to the ever more pertinent debate on the use of different methods in professional practice: financial experts and analysts tend, in fact, to compare results according to different estimates.

scholarly journals Sensitivity analysis of Economic Value Added as a dominant indicator of concept of economic profit

2021 ◽  
Vol 129 ◽  
pp. 03014
Author(s):  
Dusan Karpac ◽  
Viera Bartosova
Keyword(s):  
Sensitivity Analysis ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
Financial Status ◽  
Economic Profit ◽  
Methods Of Synthesis ◽  
The Difference ◽  
Individual Variables ◽  
The Impact

Research background: The modern goal of enterprises, value creation, is achieved through the concept of economic profit. Profit, as part of profit or loss, is one of the most important flows, pointing to how efficiently corporate capital is used in an entity (Coatney & Poliak, 2020). The article deals with the difference between accounting and economic profit, the selected form of economic profit - the EVA indicator. The economic value added (EVA) indicator is one of the best-known modern indicators of a company's performance (Siekelova et al., 2019). It shows whether the given entity increases its value or only earns for its economic survival. The benefit of this indicator is the valuation of equity and taking into account the risk. It is difficult to express the economic profit itself, therefore the article also addresses the issue of its calculation (Shah et al., 2016). The company needs to know its financial status and the direction it is heading, so we decided to calculate a selected form of economic profit. Purpose of the article: The company needs to know its financial status and the direction it is heading, so we decided to calculate a selected form of economic profit. When expressing the value of the economic value added indicator, it is also important to know the items and components of the calculation that have the strongest meaning and effect on the possible amount of the indicator. Given this, we decided to use a sensitivity analysis, which points to the effect of individual variables that participate in the construction of the EVA calculation. Methods: In this work, the methods of induction, deduction, and comparison were used to obtain a true picture of the subject issue. Methods of synthesis and analysis of the researched issues were also used. Findings & Value added: In the paper there is pointed out the intensity of the impact of individual variables that entered into the calculation of the economic value added indicator as a dominant indicator of concept of economic profit.

scholarly journals Liquidity and the Performance of the Nigerian Manufacturing Firms: an Economic Value-added Approach

2021 ◽  
Vol 17 ◽  
pp. 47-55
Author(s):  
Olusegun Osho ◽  
Alexander Ehimare Omankhanlen ◽  
Mojisola Fasanmi ◽  
Victoria Akinjare
Keyword(s):  
Manufacturing Industry ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
Economic Sectors ◽  
Manufacturing Firm ◽  
Development Indicators ◽  
And Performance ◽  
The Impact

Considering the possibility of finding a gap and a room for improvement, so much have been written about liquidity and performance. Notwithstanding, the emphasis has been on profitability as a yardstick for performance and little has been done on other areas of performance measurement. The emphasis has also been more on various economic sectors with the exception of the manufacturing industry. This paper intends to look at the impact, if any, of liquidity provision and availability on Nigeria’s manufacturing firm’s performance from the perspective of Economic Value Added (EVA). Economic value-adding is beyond just profitability or liquidity. The firm's value to the stakeholders, its sustainability and long-term values are defined. The study would apply liquidity theories, profitability and the economic value-added theories as it applies to a manufacturing firm in a developing economy like Nigeria. On its methodology, the article data is obtained from the World Bank’s World Development Indicators-WDI and then a regression analysis will be run on the data using the SPSS software and then an analysis of the results of the regression. The last section of the article would conclude and make recommendations from the study outcome and the empirical analysis with respect to the theories.

scholarly journals The Impact of the General Level of Prices and Operating Profit on Economic Value Added (EVA) (Analytical Study: ASE 2001 - 2015)

2017 ◽  
Vol 13 (11) ◽  
pp. 142
Author(s):  
Ebraheem Al Taha'at ◽  
Mohammad Abdel Mohsen Al-Afeef ◽  
Saqer Al Tahat ◽  
Muhannad Akram Ahmad
Keyword(s):  
Analytical Study ◽  
Cost Of Capital ◽  
Positive Impact ◽  
Economic Value ◽  
Value Added ◽  
General Level ◽  
Sales Volume ◽  
Economic Value Added ◽  
Operating Profit ◽  
The Impact

This study aims to show the importance of the economic value added as one of the most modern to measure the financial performance for firms, then to know the effect of the general prices level and earnings before interest and taxes on EVA in the companies listed in (ASE) (2006-2015), the researcher addresses a random sample consisting of (46) Company, and uses regression model, which connects the dependent and independent variables.The results of the study shows that There is a significant impact for the general prices level and the earnings before interest and taxes on the economic value added, and also shows that 22% of the changes in the economic value added are due to general prices level and earnings before interest and taxes, and 78% of the changes are due to other factors.This study also recommends the need to manage of operating expenses because of the positive impact of operating profit on EVA value, and to take inflation into account when calculating the value of EVA, and also searching for other factors that could affect the value of EVA such as sales volume, cost of capital, and the growth in the total assets of the company's financial leverage, etc…

scholarly journals أثـر الأدوات الداخلية لحوكمة الشركة على رأس المال الـعـامـل وانعكاسهما علـى القيـمـة الاقتصـادية المضـافـة: دراســة تطبيقيـة علـى عينــة مـــن الشـركــات الصنــاعــيــة المـدرجــة في بورصــة عـمّــان لــلأوراق المـالـيـة

2013 ◽  
Vol 19 (73) ◽  
pp. 166
Author(s):  
ارشد فؤاد التميمي ◽  
احمد فارس القيسي
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
Positive Relation ◽  
Working Capital ◽  
The Third ◽  
The Impact ◽  
Internal Instruments

Abstract Objective of this research focused on testing the impact of internal corporate governance instruments in the management of working capital and the reflection of each of them on the Firm performance. For this purpose, four main hypotheses was formulated, the first, pointed out its results to a significant effect for each of corporate major shareholders ownership and Board of Directors size on the net working capital and their association with a positive relation.  The second, explained a significant effect of net working capital on the economic value added, and their link inverse relationship, while the third, explored a significant effect for each of the corporate major shareholders ownership and Board of Directors size on the economic value added. The fourth, revealed a significant effect of the internal instruments for corporate governance on the economic value added in light of the different net working capital.

scholarly journals ECONOMIC VALUE ADDED (EVA) SEBAGAI PENGUKURAN KINERJA KEUANGAN PADA INDUSTRI TELEKOMUNIKASI SUATU ANALISIS EMPIRIK

2018 ◽  
Vol 1 (1) ◽  
pp. 101-119
Author(s):  
Trinik Susmonowati
Keyword(s):  
Financial Performance ◽  
Stock Price ◽  
Cost Of Capital ◽  
Economic Value ◽  
Value Added ◽  
Financial Statements ◽  
Capital Cost ◽  
Economic Value Added ◽  
The Impact ◽  
A Company

The company's performance has always been measured based on financial ratios for a certain period. Measurement based on financial ratios is very dependent on the accounting treatment used in the preparation of corporate financial statements. The purpose of a company that is only oriented to the achievement of profits as big as when it is no longer relevant today. Therefore the responsibility of the company not only to the shareholders, but to all stakeholders. Performance appraisal of a company is very important that the assessment process must be in line with the effectiveness and efficiency in achieving competitive advantage in the business world. Since the last ten years has developed a new approach in assessing the financial performance of companies known as Economic Value Added (EVA). EVA model comes from the concept of capital cost (cost of capital), which is the risk faced by the company in making investments. The concept of Economic Value Added (EVA) as an alternative to performance measurement based on the value (EVA) is an approach in assessing the performance of the company by paying fair attention to the expectations of funders or investors. EVA is the profit left behind after deducting the capital cost (cost of capital) invested to generate the profit. Positive EVA values can be interpreted that the company's management has created value (creating value). Conversely, if the value of negative EVA means that there is no economic value added into the company. The goal to be achieved by the authors in this study is To determine the financial performance of Telecommunications Company in review of Economic Value Edded (EVA). And To know Which Telecommunication Company that provides better economic value.This research used qualitative analysis. The qualitative analysis method is used to interpret and analyze the result of EVA calculation, that is to measure the added value of the company by calculating all capital cost, either the capital contribution from the shareholder or from the loan, or the risk faced by the company in making the investment. To measure the company's performance required financial report data in the form of income statement and balance sheet, JCI, stock price and SBI rate data. Data Collection Procedure is the data of financial statements of companies from the telecommunications industry listed on the Indonesia Stock Exchange in the period 2005-2009, obtained from www.idx.co.id. Monthly monthly stock price index (IHSG) monthly from 2005-2009, interest rate of 12 month time deposit from 2005-2009 and stock price data used since 2005.The results show that only PT Telekomunikasi Indonesia Tbk alone can generate positive EVA, while PT Indosat Tbk and PT Bakrie Telecom Tbk generate negative EVA. Negative EVA values are caused by several factors, among others: because of the significant increase in fuel prices, followed by inflation and rising interest rates affecting people's purchasing power, rising capital costs and operational costs of both companies, the impact of the 2008 global financial crisis that affected on declining stock value and the impact of tariff war between telecommunication companies where telephone tariffs are lower and the decline in long distance call rates affects the telecommunication company's operating revenues.

scholarly journals Economic value added: A financial flexibility tool

2014 ◽  
Vol 12 (1) ◽  
pp. 703-708 ◽  
Author(s):  
Reeta Shah ◽  
Arunima Haldar ◽  
S.V.D. Nageswara Rao
Keyword(s):  
Financial Performance ◽  
Shareholder Value ◽  
Economic Value ◽  
Value Added ◽  
Performance Measure ◽  
Corporate Financial Performance ◽  
Economic Value Added ◽  
Financial Flexibility ◽  
The Right ◽  
The Impact

With increased emphasis on shareholder value addition, there has been an ongoing debate on choosing the right measure of corporate financial performance. There is need for a single measure of financial performance that not only measures corporate financial performance but also works as a financial flexibility tool. The financial performance measure employed by the firm measures the value generated by the firm. This necessitates the firms to choose the right performance tool which can reflect the accurate value added by the firm. We study the role and implications of Economic Value Added as a financial performance measure and further discuss its applicability as a tool for introducing financial flexibility. Flexibility is assessed by measuring the impact of organization’s competitiveness and performance. The findings reveal that EVA as a tool enables the corporate to differentiate between value-creating and value-destructing activities and helps managers in taking right decisions which enhances shareholder value. Thus, finally the research makes a case for managers to use EVA as a tool to provide additional information to investors. Interestingly, EVA can also be adapted as a corporate philosophy for motivating and educating employees

Relationship between EVA (Economic Value Added) and Share Prices of Select Companies in BSE-SENSEX - An Empirical Study

2015 ◽  
Vol 4 (3and4) ◽  
Author(s):  
Mathangi Aravind ◽  
K. Ramya
Keyword(s):  
Performance Metrics ◽  
Explanatory Power ◽  
Economic Value ◽  
Value Added ◽  
Market Value ◽  
Economic Value Added ◽  
Share Prices ◽  
The World ◽  
The Impact ◽  
The Relationship

In todays competitive world, corporate companies all around the world are trying to maximize the wealth of their shareholders in order to gain market value as well as satisfy their stakeholders. With the gaining popularity of value based performance measures like Economic Value Added (EVA), Total Shareholder Return (TSR), Cash Value Added (CVA) etc., many corporate companies in India have started assessing their value in terms of these measures. This paper investigates the relationship between EVA and share prices of select companies in BSE-SENSEX for a period of six years from 2008 to 2013. The study focuses on the explanatory power of EVA with respect to share prices of the selected companies. In turn, the performance of the selected companies belonging to different sectors in BSE-SENSEX was analyzed using EVA. The volatile nature of the capital markets characterized by various speculative activities have a greater influence on share prices, eventually undermining the impact of performance metrics on them. Thus, the findings of the study enumerates that EVA does not have a considerable explanatory power on share prices.

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