Influence of cost drivers on value-oriented management of investment activity of companies
-
Author(s)Kateryna AndriushchenkoLink to ORCID Index: https://orcid.org/0000-0002-6274-5310
,
Mariia TepliukLink to ORCID Index: https://orcid.org/0000-0001-6823-336X
,
Svitlana BoniarLink to ORCID Index: https://orcid.org/0000-0001-8910-7100
,
Natalya UshenkoLink to ORCID Index: https://orcid.org/0000-0002-3158-4497
,
Anastasiia LiezinaLink to ORCID Index: https://orcid.org/0000-0003-0516-6598
-
DOIhttp://dx.doi.org/10.21511/imfi.16(3).2019.31
-
Article InfoVolume 16 2019, Issue #3, pp. 353-364
- Cited by
- 928 Views
-
155 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Nowadays, there is a constant need to build an appropriate system for assessing the company`s value for shareholders, which implies that the company chooses an adequate model based on drivers, which allow making decisions at all management levels associated with investment activity, ensuring an increase in value for owners. The purpose of the article is to improve the methodology for assessing the influence of drivers as a critical element of value-oriented management on the investment activity of companies. The analysis technique consists of two parts. In the first part, regression models of factors influence and cost drivers on the value multipliers and shareholder profits were built. Based on the interpretation of the coefficients obtained, it should be noted that the cost-effectiveness of assets has the most powerful impact on the market value of the company and shareholder`s profitability.
Thus, the presence of sustainable competitive advantages, resulting simultaneously in higher company value and profitability, the variable profitability in its turn does not fully reflect the potential for generating cash flows in the future. In the second part of the analysis, the authors built the probit models of the factors influence and cost drivers on the probability that the value multipliers of the market average values and the total profitability of shareholders are above the market average. Based on the relative strength model of the influence factors and drivers of value on value-based management, the recommendations were formulated.
- Keywords
-
JEL Classification (Paper profile tab)G11, G17, G32
-
References22
-
Tables2
-
Figures5
-
- Figure 1. Value-oriented management of investment activity of companies
- Figure 2. Descriptive statistics, 2010–2018
- Figure 3. The average of the sample values of the value multipliers and shareholder return
- Figure 4. Financial company value drivers
- Figure 5. Probit model estimates
-
- Table 1. Evaluation of drivers and factors of company value
- Table 2. Norms for assessing factors and cost drivers of Ukrainian companies
-
- Andriushchenko, K., Ishchenko, M., Sahaidak, M., Tepliuk, M., & Domina, O. (2019a). Prerequisites for the creation of financial and credit infrastructure of support for agricultural enterprises in Ukraine. Banks and Bank Systems, 14(2), 63-75.
- Andriushchenko, K., Lavruk, V., Uliganets, S., Kovtun, V., & Matviienko, H. (2019b). Reputation risk management companies based on competence approach. TEM Journal, 8(2), 516-524.
- Armitage, H., & Jog, V. (1999). An executive view of shareholder value creation: Determinants of success in publicly held Canadian organizations (Emerging Issues Paper). Society of Management Accountants of Canada.
- Arnold, G. (1998). Corporate financial management. London: Pitman.
- Ayda, F., & Affes, H. (2014). Contextual factors impact on the use of new management accounting practices: An empirical analysis in the Tunisian context. Journal of research in international business and management, 4, 45-55.
- Bondarenko, S., Liganenko, I., Kalaman, O., & Niekrasova, L. (2018). Comparison of methods for determining the competitiveness of enterprises to determine market strategy. International Journal of Civil Engineering and Technology, 9(13), 890-898.
- Bruelheide, H., Dengler, J., Jiménez-Alfaro, B., Purschke, O., Hennekens, S. M., Chytrý, M., & Zverev, A. (2019). sPlot – A new tool for global vegetation analyses. Journal of Vegetation Science, 30(2), 161-186.
- Cenamor, J., Sjödin, D. R., & Parida, V. (2017). Adopting a platform approach in servitization: Leveraging the value of digitalization. International Journal of Production Economics, 192, 54-65.
- CFA. (2015). Environmental, Social and Governance Issues in Investing, A Guide for Investment Professionals. CFA Institute.
- Chornei, R., Daduna, H. V. M., & Knopov, P. S. (2005). Controlled Markov fields with finite state space on graphs. Stochastic Models, 21(4), 847-874.
- Clark, G., Feiner, A., & Viehs, M. (2015, March). From the Stockholder to the Stakeholder: how sustainability can drive financial outperformance.
- Copeland, T., Koller, T., & Murrin, J. (2000). Valuation, measuring and managing the value of companies (3rd ed.). New York: Wiley.
- Crifo, P., & Sinclair-Desgagné, B. (2013). The Economics of Corporate Environmental Responsibility. International Review of Environmental and Resource Economics, 7(3-4), 279-297.
- Dietz, S., Bowen, A., Dixon, C., & Gradwell, P. (2016). ‘Climate value at risk’ of global financial assets. Nature Climate Change, 6, 676-679.
- Eurosif. (2016). Eurosif response to European Commission’s public consultation on long-term and sustainable investment.
- IIF. (2015). Socially Responsible Investing: A primer on this fast-growing asset class – and its performance. Institute Of International Finance publications.
- Jensen, M. (2001). Value maximization, stakeholder theory, and the corporate objective function. Journal of Applied Corporate Finance, 14(3), 8-21.
- Law Commission. (2014). Fiduciary Duties of Investment Intermediaries (Law Com No. 350).
- Lenka, S., Parida, V., & Wincent, J. (2017). Digitalization capabilities as enablers of value co-creation in servitizing firms. Psychology and Marketing, 34, 92-100.
- Malmi, T., & Ikäheimo, S. (2003). Value based management practices – some evidence from the field. Management Accounting Research, 14(3), 235-254.
- Ojra, J. (2014). Strategic management accounting practices in Palestinian companies: application of contingency theory perspective (Doctoral Thesis). University of East Anglia.
- Van Duuren E., Plantinga, A., & Scholtens, B. (2015). ESG Integration and the Investment Management Process: Fundamental Investing Reinvented. Journal of Business Ethics, 138(3), 525-533.
