Portfolio Companies Research Articles

METHODOLOGICAL APPROACH TO OPTIMIZING THE MANAGEMENT STRATEGY OF THE ASSORTMENT POLICY OF A PHARMACEUTICAL COMPANY BASED ON INVENTORY CONTROL

Abstract Aim is a methodological solution for optimizing the assortment policy management strategy of a pharmaceutical company based on inventory control. Research materials and methods. The study was conducted using the example of the pharmaceutical company Bayer and is based on the principles of positivistic philosophy and a deductive approach. The research materials include primary data from an interview with a pharmaceutical logistics manager and secondary data from prescriptions. The collected data were analyzed by calculating a number of values ​​(economic order volume, reorder point, safety stock, average assortment level) using ABC analysis and cycle counting methods. According to the collected initial information, the assortment portfolio of the analyzed company includes 400 pharmaceutical products. The proposed methodological approach is based on a consistent assessment of the assortment management system in effect in the pharmaceutical company. A qualitative assessment of the assortment status is given for individual items: was it insufficient, excessive, acceptable, or discontinued. Finally, an assortment management strategy was recommended aimed at increasing the efficiency of the assortment policy while minimizing overall costs. The accuracy of the product range accounting process is improved by using the cyclic counting method and ABC classification for each product. Results. The article presents the author's methodological approach to optimizing the product range portfolio of a pharmaceutical company. The proposed approach is based on data on inventory control under conditions of uncertain demand for pharmaceutical products using a continuous analysis policy. A quantitative and qualitative assessment of the product range status for individual drug names was conducted and an adapted product range management strategy was recommended, aimed at improving the efficiency of the product range policy while minimizing overall costs. Conclusion. The accuracy of the product range dynamics accounting process is improved by using the cyclic counting method and ABC analysis of products.

Sponsor Reputation and Capital Structure Dynamics in Leveraged Buyouts

We examine whether leveraged buyout (LBO) sponsors’ reputations as borrowers affect the refinancing terms of their portfolio companies. In 510 U.S. LBOs for which we can reconstruct debt financing activity, 67% of financing events occur one quarter before the earliest existing debt maturity. These On Time events generally improve borrowing terms, whereas Early events feature more dividends, leverage, and higher cost. In each case, dividend issuance decreases and cost increases with the proportion of the sponsors’ recent exits that are failures. Effects are absent for matched firms and prior to the LBO and are procyclical; sponsors with recent failures miss opportunities to decrease financing costs in good times. This paper was accepted by Bo Becker, finance. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.00971 .

ФОРМУВАННЯ ПОРТФЕЛЮ ІНСТРУМЕНТІВ ЦИФРОВОГО МАРКЕТИНГУ ПІДПРИЄМСТВА В УМОВАХ ВІДНОВЛЕННЯ ЕКОНОМІКИ УКРАЇНИ

The article examines the peculiarities of the period of post-war recovery of the Ukrainian economy and their influence on the composition of the portfolio of digital marketing tools of enterprises. The purpose of the article is to develop an algorithm for forming a portfolio of digital marketing tools for an enterprise in the period of post-war recovery, to clarify the concept of a "portfolio of digital marketing tools of an enterprise." It is substantiated that in the post-war period, the provisions of the concept of anti-crisis marketing will be relevant for planning the marketing activities of enterprises. The most common digital marketing tools are identified. The definition of the term "portfolio of digital marketing tools of the enterprise" is proposed. An algorithm for forming a portfolio of enterprise digital marketing tools has been developed. It was determined that the audit of the enterprise's marketing activity is the foundation for the formation of the enterprise's portfolio of digital marketing tools. It was determined that conducting marketing research will contribute to increasing the accuracy of the planning of the enterprise's anti-crisis marketing program. It is proposed to apply decision-making criteria in conditions of uncertainty and risk when choosing optimal alternatives for achieving the company's marketing goals in the post-war period. It was determined that monitoring the level of rationality of the company's portfolio of digital marketing tools is a necessary condition for controlling the company's marketing activities. The expediency of focusing on a proactive strategy in the implementation of marketing activities has been investigated. It has been studied that in recent years the tools of digital marketing have been constantly improved and this allows it to be considered as an opportunity to spend the marketing budget of enterprises more rationally. The portfolio of digital marketing tools can include content marketing, SEO, contextual and targeted advertising, advertising in social networks, e-mail marketing, influencer marketing, lead generation, complex analytics, viral marketing.

The performance of private equity portfolio companies during the COVID-19 pandemic

We study the performance of PE-backed companies during the COVID-19 pandemic. Our findings suggest that, on average, PE-backed firms were more resilient compared to closely matched industry peers during the pandemic. However, this outperformance is of a smaller magnitude than during the pre-pandemic non-crisis period, suggesting that the outperformance is driven by investor selection of target firms ex ante, rather than active support mechanisms. The outperformance during the pandemic is found to be insignificant among firms which were the most vulnerable at the onset of the pandemic, and firms in the most exposed industries. These more vulnerable firms appear to have been less active in obtaining additional financing during the pandemic, and consequently, suffered a significantly higher incidence of distress. However, non-PE-backed firms in distress had a higher incidence of liquidation, while PE-owned firms more often negotiated formally with creditors to continue trading. Our analysis shines light on the role of PE investors during a large, exogenous shock, and suggests that, in the case of the pandemic, their adept target selection may help to explain the outperformance more so than their actions to protect vulnerable firms in a crisis.

Swot Analysis to Determine The Right Business Strategy

This study aims to determine the internal and external factors of the company, the company's portfolio and determine the right business strategy at JAB Feed Animal Feed Factory. This type of research uses a sequential exploratory model and the method used is a mixed method or mixed method. The focus of this research is to analyze internal factors and external factors including: strengths, weaknesses, opportunities and threats that affect the JAB Feed Animal Feed Factory in determining the company's portfolio and determining business strategies. The data sources used are observations, questionnaires and interviews. In this study using 2 data analysis techniques, namely the qualitative data analysis technique used in this study using interactive Miles and Huberman. While quantitative analysis techniques use SWOT analysis. The data validity used in this research is source triangulation. The results showed that the internal factors of the JAB Feed Animal Feed Factory obtained a value of 0.75 while for external factors obtained a value of 1.03 and the company was in quadrant I position, this position indicates a strong and opportunity company/aggressive strategy, where an aggressive strategy means that the company must be able to take advantage of the company's strengths in maximizing opportunities from the company's external scope.

Leveraging Technology: Enhancing Operations and Boosting EBITDA in Private Equity Owned Portfolio Companies

Leveraging Technology: Enhancing Operations and Boosting EBITDA in Private Equity Owned Portfolio Companies

Analysis of Information Technology Strategy in Multifinance Companies Based on Digital Present Information Website

Technology is needed both in the process of collecting data, information and activities to reduce the use of paper or paperless. According to OJK, a Financing Institution is a business entity that carries out financing activities in the form of providing funds or capital goods. Some of the benefits of IT strategy Making a roadmap for IT development and development both related to infrastructure, application systems, services and information security. With the data and information that can be collected, it can be managed and used in decision making through an analysis that can be used in looking at the policies and strategic decisions of the organization. With the IT strategy, companies can have strategies in securing data and system management in the organization, in particular, with the IT strategy, it can be used to segment the market and determine business focus to increase added value that can be provided to consumers or debtors. From making a checklist using the websites of 26 finance companies, it can be seen that the company's strategy in digitalization and information technology such as having applications, ISO 270001 standards, using marketing and payment channels as well as the use of financing glorification forms and financing applications shows that multifinance companies have begun to move to digitalization. If a multifinance company has an aggressive vision for asset development and digital present, digital channels are enhanced to increase the number of potential new customers entering through digital channels and of course by improving and maintaining data quality by using third party data and increasing payment channel cooperation to ensure more choice of debtor payments. With a moderate vision, the use of third party data to improve credit quality to improve or improve the quality of the asset portfolio of multifinance companies.

Governance through exit: Pension fund reform impact on real earnings management of portfolio companies

Theoretical models predict that the threat of outside blockholder exit can mitigate agency problems and force managers to undertake actions that would maximize firm value in the long run. We examine whether the institutional blockholder exit threat curbs managerial misbehavior and short-termism reflected in real earnings management. Our study exploits a natural experiment—the Polish pension fund reform of 2013 that encouraged pension funds to trade more actively and imposed a real threat of exit on their portfolio companies. Using a difference-in-differences approach, we provide evidence that the reform significantly decreased the level of real earnings management in “treated” companies, that is, companies with open-ended pension funds (OFEs) playing the role of blockholders. The effect was more significant for firms in a multiple blockholder setting, firms under common ownership, and firms with higher insider’s stakes. Moreover, we confirmed that treated companies that decreased real earnings management in the post-reform period experienced the increased long-term operating performance.

Модель оптимізації портфеля купівлі-продажу електричної енергії компанією-постачальником

The study examined the market dynamics of an electricity supply company and proposed an optimization model aimed at enhancing its profitability in the wholesale market. This model is formulated as a mixed integer linear programming problem. By solving this optimization problem, the most advantageous contractual terms for purchasing and selling electricity from those available on the market are determined. This allows the company to efficiently manage its electricity portfolio and meet its consumption schedule as per existing supply contracts with consumers. The IBM ILOG CPLEX Optimization Studio software was employed to develop and solve the optimization problems related to the company's portfolio. The computational experiments conducted provide insights into the effectiveness of the proposed model and its practical applicability. These results demonstrate the model's adequacy and its potential for real-world implementation.

INTEGRATION OF APPLIED IPD MODULES INTO THE COMPOSITION OF ORGANISATIONAL AND TECHNOLOGICAL TOOLS FOR CONSTRUCTION

Modern construction projects are characterised by complex multifunctional relationships that require processing a large amount of information. The main task of innovative development of construction development is to create competitive advantages in the strategic perspective, which form a safe and comfortable environment for human life that meets high international quality standards, ensuring sustainable socio-economic development of the country's construction industry. Integrated Project Delivery (IPD) is a completely new idea based on Building Information Modelling (BIM) technology. The main idea is to work closely with the investor, designer and executors of a construction project. Achievement of competitive advantages should be based on innovative re-equipment of the construction industry, development of innovative competences, engineering schemes for life cycle management of construction projects, application of information technologies to increase productivity, reduce energy intensity, material consumption and cost of construction products. The article analyses the benefits of using information modelling and the integrated project implementation method in construction. A mathematical model for choosing the optimal network organisational structure of a project is developed. The main factors affecting the synergistic effect of the construction project implementation (costs of making changes to the project, increasing the implementation time, transaction and operating costs) are identified. An economic and mathematical model for assessing the synergistic effect of the joint implementation of integrated construction project implementation and information modelling has been built and tested in practice. A simulation model has been developed for a comprehensive study and optimisation of the communication network of participants in the implementation of a construction project. The results obtained will allow the top management of contractors to effectively monitor, structure and manoeuvre assets in their operations, substantiate the economic strategy and parameters of the production and business portfolio of construction companies.

VC ownership post‐IPO: When, why, and how do VCs exit?

AbstractWe examine the evolution of lead venture capital firm (VC) ownership after their portfolio companies (PCs) are publicly listed. We find that, on average, lead VCs retain their shares for three years post‐IPO. Higher liquidity pressure and better stock market performance lead to faster VC exits, while higher VC reputation, better VC monitoring, and higher quality PCs lead to slower exits. VCs mostly use sales in the open market, share distributions, and mergers and acquisitions to divest their shares. Higher liquidity pressure incentivizes VCs to use majority share distributions, while better stock market performance increases their preference for continuous sales.

Research on Risk Assessment for Different People

The traditional idea is that risk aggregation is the operating principle of the insurance industry, sometimes called the insurance principle, which refers to the aggregation of unrelated risk items to reduce risks [1]. Simply put, because insurance companies issue many policies to different customers with independent risk sources, each policy only accounts for a small part of the insurance company's portfolio. With this decentralized approach to achieve the purpose of reducing risk. However, selling more insurance means increasing the risk investment position, and the overall risk will also rise. Therefore, we find that simply increasing the sale of new independent policies cannot explain the insurance industry. Subsequently, we put forward the concept of risk sharing, which is also the basic principle used by the insurance industry, that is, holding a large number of policies in diversification on the basis of controlling the total risk by selling shares to shareholders. Spread a certain amount of risk over many investors, and as the Sharpe ratio increases with the number of policies, the risk per shareholder decreases.

TRANSFORMATIONAL PROCESSES IN RESOURCE-RICH COUNTRIES: FROM NATURAL RESOURCES TO INNOVATION AND TECHNOLOGY-BASED ECONOMY

This paper aims to assess the development pattern of resource-rich countries like Norway, Kuwait, Saudi Arabia, and the Republic of South Africa by analyzing their stock markets. As resource-rich countries have profound implications for the world's sustainable development, it is essential to investigate whether they transform natural resource wealth into sustained growth by reorientation from related to raw material industries to modern ones based on information and technologies. The analysis of resource-rich countries' stock markets allowed us to conclude that partially these countries are on the way to an economy dominated by intangible assets. Nevertheless, despite the declared intentions, some traditional attachments to raw materials are still present. At the same time, most companies in the optimal portfolios of these markets have a long-term nonlinear strategy. The impact of the pandemic COVID-19 turned out to be significant, but short-lived. The research was carried out based on R and Python packages.

Control strategies for impactful exits in impact private equity firms

AbstractTraditional private equity firms aim to maximise their financial returns when exiting an investment. In contrast, a major consideration for impact private equity firms is to ensure an impactful exit from their investments – increasing the chance of impact continuity in portfolio companies post exit. However, impactful exits may not be realised due to ownership‐, management‐, and operations‐related threats. Drawing on data from 45 impact private equity firms, we identify the control strategies that impact investors use throughout the investment lifecycle to manage impactful exits from investment. We also highlight how control‐related issues differ between traditional and impact private equity firms.

Portfolio management of ESG-labeled energy companies based on PTV and ESG factors

This paper evaluates monthly quartile portfolios of ESG-labeled companies constructed based on their Prospect Theory Value (PTV) and ESG scores in the closely monitored energy sector. Investing in ESG-labeled energy stocks can outperform a value-weighted global energy sector index, according to several out-of-sample performance analyses. The PTV strategy stands out over a sample period of more than twelve years. This strategy performs similarly to a fully diversified world market index and consistently outperforms a world energy index. Over the last five years, the simple strategy based on ESG scores performs similarly to the PTV strategy.

Venture capital and stock price informativeness: Evidence from China

AbstractThis study shows that, unlike the positive role played by other institutional investors documented in the literature, venture capital (VC) in pursuit of short‐term gains through exit strategies reduces the stock price informativeness of portfolio companies, especially when VC is associated with a higher level of the ability (longer‐term VC directors, large VC syndicate), incentive (private VC sponsors), and willingness (less reputable VCs) to manipulate information. Furthermore, internal and external monitoring helps mitigate the negative impact of VC on stock price informativeness. Finally, earnings management and reduced information disclosure mediate the relationship between VC involvement and stock price informativeness.

Venture debt financing and firm development: evidence from Indian entrepreneurial landscape

ABSTRACT This paper explores the impact of Venture Debt (VD) funding on Indian firms’ development outcomes. We define success of funding round (FR) of a firm as (a) the prevalence of a subsequent FR and (b) based on percentage increase in self-reported valuation of consecutive FRs. Analysis of 13,809 FRs in Indian firms from January 1998 to September 2022 uncovered a positive and significant association between success and VD-backing of the firm. When success is defined as prevalence of a subsequent FR, we find VD investors to have marginally higher selection effects vis-à-vis their equity counterparts. On the other hand, when success is based on self-reported valuation data, selection effects are elusive. Further, counterfactual analysis for both definitions of success indicates that the likelihood of VD-funding rounds becoming successful are not any different had they received VC funding instead of VD funding. This goes to show the absence of treatment effects of VD investors. Taken together, our findings indicate that while Indian VD investors may select better portfolio companies, they fail to have any treatment effects on firms’ development outcomes. Lastly, parametric hazard model outcomes uncover reduction in investors’ time to exit in the event of the firm being VD-backed.

Ways to Increase the Efficiency of Investment Activities of Insurance Companies in Uzbekistan

This article aims to develop scientific and methodological proposals and practical recommendations to improve the methodology for assessing the effectiveness of investment activities of insurance organizations. The work uses scientific methods for studying the processes of economic reality - systematic analysis, generalization, grouping, observation, logical and comparative methods of analysis, abstract logical thinking, comparative analysis, mathematical modeling, econometric analysis, actuarial calculations, etc. Based on the systematization of information on investment activities, investment policies, and experience of insurance companies in developed countries, the use of statistical and mathematical methods of data processing, diversification of the financial and investment activities of insurance companies, recommendations, and indicators used to assess the effectiveness of insurance companies have been developed, identified and classified into individual areas, external and internal factors influencing the financial stability of insurance organizations, the possibilities of increasing the amount of profit they receive are substantiated, proposals are given to improve the methodology for managing the investment portfolio of insurance companies, and prospects for the development of modern options for investment activities are identified. The effective organization of the mechanism for monitoring the financial stability of insurance companies allows for minimizing the level of missed opportunities in achieving the company’s strategic goals based on econometric forecasting of financial stability and assessment of financial risks. In order to strengthen the role of insurance companies in increasing the investment potential of the country Uzbekistan, it is proposed to develop the securities market, the market for government, corporate, and municipal bonds.

Private Equity in Distress and the Incentives of Collateralised Loan Obligations

Abstract This article explores the problem that both modern private equity (PE) firms, and collateralised loan obligation (CLO) lenders to PE portfolio companies, have incentives to avoid a formal restructuring of PE portfolio companies in financial distress. The author is concerned that this may lead to negative social costs for suppliers, employees, customers and even government agencies. She explores how and why the problem arises, and the ways in which corporate and corporate insolvency law might be able to respond to it. Some suggestions are made, but it is accepted that any solution involves a sensitive balance that needs to be approached with considerable care.

Renewable Energy Stocks’ Performance and Climate Risk: An Empirical Analysis

This article studies the relationship between renewable energy stocks’ performance and climate risk. It shows that publicly held renewable energy stocks underperform as a reaction to climate policy information releases, modeled by feed-in tariff (FIT) legislation announcements. The study examined stock price behaviors 2 days before and 30 days after FIT policy announcements. The stock sample used in the study has 3702 firm-day combinations, which included 180 cleantech firms and 32 events from 2007 to 2017. Based on the residual analysis of the sample’s abnormal return, it indicated that the FIT announcements are associated with significant declines in returns. The cumulative abnormal return until Day 18 was a significant −0.83%, while the average abnormal return on the day was −0.16% at normal levels. The study partially excluded the likelihood of a transitory result by varying the measurement horizon. It also adopted both the market model and the Fama–French three-factor models to rule out model misspecification when estimating abnormal returns and thus increased the robustness. In fact, the results were stable to changes in estimating the model’s specifications. In addition, the study compared the portfolio’s performance with mimicking portfolios in terms of size, book-to-market equity (BE/ME), and the firms’ geographic location. It demonstrated that the documented anomaly of the portfolio of renewable energy companies is robust.