Influence of cost drivers on value-oriented management of investment activity of companies

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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.

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    • 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