Investment Attractiveness Of Company Research Articles

The Impact of the Covid-19 Pandemic on Polish IT Enterprises - Financial Sector Analysis

The subject of this article is a financial sector analysis of companies operating in the IT industry whose shares are listed on the main and parallel markets of the Warsaw Stock Exchange. The analysis period covers the years 2018-2022, which includes the period of the COVID-19 pandemic. Opinions vary regarding the impact of the pandemic on the activities of the described industry. The aim of the article is to assess the impact of the Covid-19 pandemic on the financial situation of IT enterprises. The authors put forward 4 theses in the article: two regarding the impact of the pandemic on the financial situation of the examined industry, one stating the difference in the financial situation of companies listed on the primary and parallel markets (NC) and one stating the increase in the investment attractiveness of companies from the IT sector. The financial sector analysis of the IT industry in 2018-2022 allowed us to determine general trends in given analytical areas and confirm the theses. The determined statistical parameters show that the COVID-19 pandemic had a positive impact on the financial situation of IT sector companies listed on the Stock Exchange. The changes apply to most of the analyzed enterprises. The obtained results indicate differences in the financial situation of IT sector companies listed on the main market compared to the parallel market and an increase in the investment attractiveness of IT sector companies in the analyzed period. This article is a starting point for further research in the field of IT sector analysis, including determining or changing the market position of individual enterprises.

The impact of CEO education on the investment attractiveness of companies

Subject. The article considers the influence of CEO education on investment attractiveness of companies. Objectives. We focus on assessing the impact of CEO's level of education on company’s investment appeal. Methods. The empirical evidence contains observations on the 103 largest companies by capitalization from three macro regions: Russia, the USA, and Europe, for 2021. To test the stated hypotheses, we employ linear regression and neural network. The latter enables to build more complex (and hidden) dependencies due to multi-stage transformation of variables, and get a better predictive ability of the theoretical model on a test set than a classical linear regression. The outliers in the sample are replaced with typical values, using the k nearest neighbors method. To select the most significant independent variables in the dataset, we use a random forest algorithm that shows which variables should be included in the model. Results. The study confirmed that if Russian CEOs have an MBA degree, technical education and a degree from a prestigious American university, or technical education from European universities, this makes companies more attractive to investors. The findings serve not only as a theoretical basis for development of the agency theory of corporate finance and corporate governance, but also can be applied in practice by company shareholders to select CEOs. Conclusions. The analysis, involving the economic and mathematical methods and machine learning, demonstrated the dependence of the characteristics of CEO education on investment attractiveness of the world's largest corporations. Accordingly, shareholders need to pay special attention to the education of CEO candidates.

Enhancing Investment Attractiveness through ESG Ratings: A Sustainable Development Perspective in the Banking, Electric Utilities and IPP Industries

Objective: Main goal of the research is toto assess the level of influence of the ESG rating on the investment attractiveness of companies. The object of the study is the companies for which the ESG rating is calculated (the oil and gas, metallurgical, electric power and banking industries are observed). The hypothesis is that the management dealing with issues related to ESG should take into account the significance of the impact of the ESG rating on the investment attractiveness of companies, if the significance is proven. Method: The methodological part of this research is formed by an econometric estimation of regressions based on panel data models. Results: There were performed econometric assessment of the impact of the ESG rating on the investment attractiveness of companies. The results of econometric modeling are presented in the list of recommendations for ESG managers. In addition, results of the research proves the significance of COVID-19 pandemic impact on the investment attractiveness of the oil and gas companies. Conclusion: The novelty of the results is in the individual econometric estimation of companies’ ESG-rating impact on the investment attractiveness based on the unique set of companies, which present four different industries. Based on the sample of companies from eleven countries, for which ESG scores for the period from 2016 to 2020 were calculated, the statistical significance of ESG-factors, concerning the analysis of its impact on the indicators of investment attractiveness (ROI, EPS), was identified.

ESG standard’s as the basis for sustainable economic development

ESG standards are based on the philosophy of sustainable development of economic activity, which follows the principles of a responsible attitude to the environment, high social responsibility, and high quality corporate governance. In Russia, the principles of ESG are less common than abroad, but they are already gradually being introduced into business. At the same time, the three categories of ESG are increasingly being integrated into investment analysis, processes and decision making. Many Russian companies are firmly integrated into the agenda by implementing numerous projects, as developed countries are pushing domestic companies to implement such standards to improve the image and investment attractiveness of companies. And here we should not forget about the importance of both climate change issues and corporate governance practices, as well as the efforts and achievements of companies in the field of ecology and social responsibility, which, on the one hand, is the matter of being responsible for the well-being of employees, and, on the other hand, is contribution into the development of the territories where such companies are located.

Coefficient analysis in achieving a reliable assessment of the effectiveness of the organization’s activities

The article presents methodological approaches to the formation of realistic values of financial coefficients for the purposes of reliable evaluation of the performance of commercial organizations by clarifying the classical algorithms of their calculations, taking into account the economic content of the initial indicators of financial and management reporting used, formed in accordance with the provisions of Russian and international standards. The use of adequate values of reporting indicators and the adjustment of formulas for calculating a number of coefficients contribute to obtaining a reliable retrospective assessment of the quality of the management system of organizations in the real sector of the economy, identifying and correctly measuring the impact of factors of the external and internal business environment on its effectiveness, optimizing the resource potential management policy to strengthen competitiveness, financial stability and investment attractiveness of companies.

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

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.

Development of a methodology for evaluating the effectiveness of financial policies of companies

Subject. This article presents an analysis of the essence of financial policy as a factor of effective development of companies. Evaluation of the effectiveness of the implemented financial policy of companies is a significant scientific and practical problem. It determines the choice of the main criteria used to calculate the financial policy effectiveness. Objectives. The article aims to develop a comprehensive methodology for assessing the effectiveness of financial policy of companies in modern conditions, and define criteria for its evaluation. Methods. The Due Diligence approach is the basis for solving the research tasks: comparing the current standards and methods for assessing the financial policy of companies and simplifying its implementation through the proposed method of multivariate coefficient analysis. Results. The article offers a comprehensive approach to assessing the effectiveness of financial policy, considering electric power companies as a case study. The practical significance of the results obtained lies in the use to increase the investment attractiveness of companies that are considered as potential investment objects. Conclusions. The research proposes a methodology for assessing the financial policy of companies based on a multivariate, customizable system of financial coefficients. An indicator of the effectiveness of financial policy of companies was calculated. It can be recommended for practical application. The obtained results of evaluating the effectiveness of financial policy can be used by the companies’ management to make management decisions, investors to choose the best investment option, market participants to rank companies by efficiency, and determine industry benchmarks.

Equity crowdfunding: Determinants of company’s success on a crowdfunding platform

Equity crowdfunding, a form of company financing through equity investments, has become increasingly relevant in recent years. This paper analyzes the advantages of this financing mechanism, the motives of issuers and investors — participants of the crowdinvesting process. Most participants of investing are non-professional investors, for whom recommendations for choosing companies on the platform based on the determinants of investment attractiveness are of practical value. The authors conducted an empirical study to establish the relationship between investment attractiveness and the characteristics of issuing companies emerging on the crowdfunding platforms. The study sample includes 299 companies that raised equity capital on one of the leading platforms in the UK, Crowdcube, between 2011 and 2020. The results of the study showed that the investment attractiveness of companies is higher if during placement they offer a larger share proportion of non-voting than voting shares during the placement. Companies in which managers own a share in capital, firms with registered patents as an indicator of their innovative activity, and companies that do not demonstrate industry diversification have a higher attractiveness for investors. This research contributes to the existing studies of determinants of the success of equity crowdfunding, provides recommendations to investors on the choice of companies with particular characteristics that determine the investment attractiveness of issuers on crowdfunding platforms.

The Impact of Intellectual Capital on Performance and Investment Attractiveness of Russian Companies

Historically, the growth of intellectual capital has been associated with the trend of an increasing market capitalization of firms, but in practice the consequences of investing in companies that use intellectual capital are often not clear. Studying the relationship between intellectual capital and the ability of companies to generate a stable revenue as an indicator of investment attractiveness is becoming a relevant area of research. The purpose of this article is to study the influence of the intellectual capital of companies on their performance, and, consequently, on possible decisions of investors. The main hypothesis was an assumption about positive significant impact of the dynamic and static structural, relational and human capital of companies on the company's ability to generate revenue and retain a certain market share throughout the year, and, consequently, demonstrate its attractiveness to potential investors. Research method: regression analysis using logistic models, based on proposed models. The likelihood of the high performance of companies is determined under the influence of intellectual capital components, which would determine potential positive decisions made by investors using financial indicators, such as revenue and market share. In contrast to previous studies, we distinguish between static and dynamic elements of intellectual capital in the models to assess the likelihood of high performance. The hypotheses about the influence of the elements of intellectual capital on the company's revenue and their ability to retain market share, which together are indicators of performance reflecting the investment attractiveness of companies, were confirmed. The results show a moderate positive relationship between revenue, market share and quality metrics for static and dynamic intellectual capital. Elements of relational and structural capital play a key role in achieving performance. From the practical point of view, managers can rely on the results of the study when developing investment strategies and revealing the drivers of investment attractiveness growth in companies that intensively use intellectual capital.

Are the Industry Cycles the Global Trend in Investment Activity?

Research background: According to the concept of sector rotation, industry cycles affect the investment attractiveness of companies. Industry cycles relate to business ones, and specific industries are preferred for investors depending on the phase of the latter. The scope of this concept application is portfolio investment management. However, we use it in a new way, assuming that the unfavourable phase leads to a decrease in the investment activity of companies in the corresponding industry. Purpose of the article: Since the concept of sector rotation claims universality, we reveal if the industry cycles are the global trend in investment activity. The research purpose is to test the hypothesis of an industry cycles’ impact on the dynamics of the investment activity in companies obtaining external financing. Methods: Using the concept of sector rotation, we suggest several industry groups and tested whether the peak of investment activity in each group falls on the expected favourable phase of the business cycle. In the context of global investment trends, this hypothesis should be confirmed at public companies of any sufficiently large financial market. For testing, Russian companies were selected. The growth rate of capital investments was used as an indicator of investment activity. Findings & Value added: It was revealed that the hypothesis about the impact of industry cycles on the investment activity of a business has the potential for further research. However, there is no sufficient evidence to consider the orientation of the investment behaviour of companies on industry cycles as a global trend.

Disclosure of environmental information in corporate reports and investment attractiveness of Russian companies

The relationship between the disclosure of environmental information in corporate reports and the interest of investors is difficult to justify due to the subjective assessment of the data communicated. The article discusses how the depth of environmental information disclosure in Russian companies’ reports estimated using the authors’ dictionary (taxonomy)1 affects their investment attractiveness. Methodologically, the study rests on the concepts of green economy, behavioral finance and corporate social responsibility. The main research methods are textual and cluster analysis. Annual reports of 60 Russian listed companies for 10 years constitute the empirical base of the present work. The authors divide the period under examination (2015–2018) into two clusters. The first one is comprised companies with a high level of environmental information disclosure and relatively low investment attractiveness; the second cluster embraces companies with a low level of information disclosure, but high investment attractiveness. Despite the fact that the composition of the first cluster changes every year, it inalterably includes organizations engaged in chemical, metallurgical, energy and mining sectors. In each cluster, there is a constant increase in the level of environmental information disclosure, which may be caused by the tightening of legal requirements. However, no statistically significant relationship between the level of environmental information disclosure and the investment attractiveness of a company was found, which might be due to the absence of significant changes in investment attractiveness of companies in each cluster over time.

Transparency of Responsible Investment Environment

The study deals with measuring the investment environment transparency for responsible investment, assessing it in Ukraine, and improving it through the rating means in sustainable development. There are ratings, rankings, indices, benchmarks and sustainable development standards as unique markers in responsible investment markets, considering the ESG − criteria for screening companies. The authors prove that ratings are tools for minimizing information asymmetry at the micro and macro levels, which is quite significant, especially in the responsible investment field. Rating is a leading factor in creating a transparent environment for investment decisions and ensuring a favorable investment climate in the world (considering the sustainable development ratings and progress towards sustainable development) and the investment attractiveness of companies (considering ESG − reporting criteria on sustainable development of companies). The authors pay much attention to the world’s sustainable development ratings, which incorporate the transparency component of the investment environment. The authors analyze Ukraine’s position in these rankings and conclude that its status and investment attractiveness are deteriorating in the international arena, particularly due to insufficient transparency of the investment environment, perception of corporate social responsibility and weak progress towards the Sustainable Development Goals. Structural and dynamic analysis of the signatories and participants of the UN Global Compact network in Ukraine confirm this thesis. Despite the positive dynamics of network members, especially in recent years, their number and composition are unrepresentative towards companies, financial sector institutions, NGOs and government organizations as leaders in the values of sustainable development and social responsibility in Ukraine. Consideration of the European countries’ experience embodied in the new EU investment plan, comprising three areas and ten measures aimed at mobilizing 650 billion euros of investment in sustainable development and the investigations made by a supranational organizations network (OECD, UN Development Program, the Sustainability Accounting Standards Board). The Global Reporting Initiative, the International Finance Corporation, the Global Impact Investing Network, and other stakeholders are essential steps in increasing Ukraine’s investment environment transparency. Ensuring environment transparency of the responsible investment by introducing methods of ranking companies and countries considering their social responsibility and achievements in the sustainable development field and its goals, standardization of products, techniques and strategies of responsible investment are key priorities of Ukrainian state investment policy. Keywords: Transparency, Investment Environment, Information Asymmetry, Ranking, Sustainable Development, Responsible Investing.