IDEAS home Printed from https://ideas.repec.org/a/url/upravl/v12y2021i2p35-42.html
   My bibliography  Save this article

Capital structure and market capitalization: Empirical analysis of Russian public companies

Author

Listed:
  • Andrey B. Ankudinov

    (Kazan Federal University, Kazan, Russia)

  • Bela S. Bataeva

    (Financial University under the Government of the Russian Federation, Moscow, Russia)

Abstract

Market capitalization is one of the main criteria for evaluating managerial efficiency in publicly traded companies. The ownership structure can act as one of the value drivers. Russian companies are characterized by concentrated ownership, which results in various agency conflicts, such as principal-agent and principal-principal problems. The paper aims to assess the impact that public corporations’ capital structure (including the composition of controlling shareholders, i.e. principals) has on their market capitalization. The research method is based on statistical analysis of the relationship between market multipliers of the largest publicly traded non-financial companies and the degree of ownership concentration and structure (state participation in equity capital and foreign ownership). The sample comprises 87 public companies traded on the Moscow Exchange; the research timeframe is from 2017 to 2019. Our findings prove that there is a statistically significant negative relationship between ownership concentration of Russian companies, state participation in their equity capital and market multiplier, and that there is a positive relationship between foreign investment and market capitalization. The investigation performed can be of interest for academic researchers involved in corporate governance in emerging markets as well as financial analysts and practitioners in the field of corporate capital structure management and the development of corporate fundraising strategies.

Suggested Citation

  • Andrey B. Ankudinov & Bela S. Bataeva, 2021. "Capital structure and market capitalization: Empirical analysis of Russian public companies," Upravlenets, Ural State University of Economics, vol. 12(2), pages 35-42, April.
    • Handle: RePEc:url:upravl:v:12:y:2021:i:2:p:35-42
    DOI: 10.29141/2218-5003-2021-12-2-3
    as

    Download full text from publisher

    File URL: http://upravlenets.usue.ru/images/90/3.pdf
    Download Restriction: no
    File URL: http://upravlenets.usue.ru/en/issues-2021/795
    Download Restriction: no
    File URL: https://libkey.io/10.29141/2218-5003-2021-12-2-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ichiro Iwasaki & Satoshi Mizobata & Alexander Muravyev, 2018. "Ownership dynamics and firm performance in an emerging economy: a meta-analysis of the Russian literature," Post-Communist Economies, Taylor & Francis Journals, vol. 30(3), pages 290-333, May.
    2. Torben Pedersen & Steen Thomsen, 2003. "Ownership Structure and Value of the Largest European Firms: The Importance of Owner Identity," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 7(1), pages 27-55, March.
    3. I. V. Berezinets & Yu. B. Ilina & M. V. Smirnov, 0. "Boards of Directors in Russian State-Owned Companies," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 2.
    4. Michele Meoli & Stefano Paleari & Silvio Vismara, 2009. "IPO valuation of European pyramidal groups," Working Papers 0902, Department of Management, Information and Production Engineering, University of Bergamo.
    5. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer & Robert Vishny, 2002. "Investor Protection and Corporate Valuation," Journal of Finance, American Finance Association, vol. 57(3), pages 1147-1170, June.
    6. Malighetti, Paolo & Meoli, Michele & Paleari, Stefano & Redondi, Renato, 2011. "Value determinants in the aviation industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(3), pages 359-370, May.
    7. Konijn, Sander J.J. & Kräussl, Roman & Lucas, Andre, 2011. "Blockholder dispersion and firm value," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1330-1339.
    8. Yan-Leung Cheung & P. Raghavendra Rau & Aris Stouraitis, 2010. "Helping Hand or Grabbing Hand? Central vs. Local Government Shareholders in Chinese Listed Firms," Review of Finance, European Finance Association, vol. 14(4), pages 669-694.
    9. Georgeta Vintila & tefan Cristian Gherghina, 2015. "Does Ownership Structure Influence Firm Value? An Empirical Research towards the Bucharest Stock Exchange Listed Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 501-514.
    10. Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, vol. 91(1), pages 54-78, March.
    11. Bykova, Anna & Molodchik, Mariia & Shamilova, Ekaterina, 2017. "Ownership concentration, corporate governance development and firm performance in Russian listed companies," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 45, pages 50-74.
    12. Boubakri, Narjess & Chen, Ruiyuan (Ryan) & El Ghoul, Sadok & Guedhami, Omrane & Nash, Robert, 2020. "State ownership and stock liquidity: Evidence from privatization," Journal of Corporate Finance, Elsevier, vol. 65(C).
    13. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    14. Benfratello, Luigi & Sembenelli, Alessandro, 2006. "Foreign ownership and productivity: Is the direction of causality so obvious?," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 733-751, July.
    15. Ankudinov, Andrei & Ibragimov, Rustam & Lebedev, Oleg, 2017. "Heavy tails and asymmetry of returns in the Russian stock market," Emerging Markets Review, Elsevier, vol. 32(C), pages 200-219.
    16. Hogan, Chris E. & Lewis, Craig M., 2005. "Long-Run Investment Decisions, Operating Performance, and Shareholder Value Creation of Firms Adopting Compensation Plans Based on Economic Profits," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(4), pages 721-745, December.
    17. Prommin, Panu & Jumreornvong, Seksak & Jiraporn, Pornsit & Tong, Shenghui, 2016. "Liquidity, ownership concentration, corporate governance, and firm value: Evidence from Thailand," Global Finance Journal, Elsevier, vol. 31(C), pages 73-87.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Irina I. Smotritskaya & Nadezhda D. Frolova, 2021. "The corporate governance quality and market capitalization of Russian companies: An empirical analysis," Upravlenets, Ural State University of Economics, vol. 12(4), pages 2-15, September.
    2. Klishevich, Daria & Panibratov, Andrei, 2024. "The omnipresence of the state and its effect on the internationalization of companies: The Russian variety of state capitalism," Journal of International Management, Elsevier, vol. 30(4).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Taylan Mavruk & Conny Overland & Stefan Sjögren, 2020. "Keeping it real or keeping it simple? Ownership concentration measures compared," European Financial Management, European Financial Management Association, vol. 26(4), pages 958-1005, September.
    2. Luigi Lepore & Francesco Paolone & Domenico Rocco Cambrea, 2018. "Ownership structure, investors’ protection and corporate valuation: the effect of judicial system efficiency in family and non-family firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(4), pages 829-862, December.
    3. Jiang, Fuxiu & Kim, Kenneth A. & Nofsinger, John R. & Zhu, Bing, 2017. "A pecking order of shareholder structure," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 1-14.
    4. Burkart, Mike & Panunzi, Fausto, 2006. "Agency conflicts, ownership concentration, and legal shareholder protection," Journal of Financial Intermediation, Elsevier, vol. 15(1), pages 1-31, January.
    5. Kuo-Pin Yang & Gavin M. Schwarz, 2016. "A Multilevel Analysis of the Performance Implications of Excess Control in Business Groups," Organization Science, INFORMS, vol. 27(5), pages 1219-1236, October.
    6. Gregorio Sánchez‐Marín & María Encarnación Lucas‐Pérez & Samuel Baixauli‐Soler & Brian G.M. Main & Antonio Mínguez‐Vera, 2022. "Excess executive compensation and corporate governance in the United Kingdom and Spain: A comparative analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2817-2837, October.
    7. Obata, Seki & 小幡, 績 & オバタ, セキ, 2003. "Pyramid Business Groups in East Asia: Insurance or Tunneling?," CEI Working Paper Series 2002-13, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    8. Carvalhal, Andre, 2012. "Do shareholder agreements affect market valuation?," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 919-933.
    9. Chaiyasit Anuchitworawong, 2010. "The Value of Principles-Based Governance Practices and the Attenuation of Information Asymmetry," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 17(2), pages 171-207, June.
    10. Luc Laeven & Ross Levine, 2008. "Complex Ownership Structures and Corporate Valuations," The Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 579-604, April.
    11. Ricardo N. Bebczuk, 2005. "Corporate Governance and Ownership: Measurement and Impact on Corporate Performance and Dividend Policies in Argentina," Research Department Publications 3212, Inter-American Development Bank, Research Department.
    12. Hani El-Chaarani, 2014. "The Impact of Financial Structure on the Performance of European Listed Firms," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 103-124.
    13. Hani El-Chaarani, 2015. "The Impact of Financial and Legal Structures on the Performance of European Listed Firms," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(2), pages 39-52.
    14. Chi, Wei & Wang, Yijiang, 2009. "Ownership, performance and executive turnover in China," Journal of Asian Economics, Elsevier, vol. 20(4), pages 465-478, September.
    15. Pombo, Carlos & De la hoz, María Camila, 2015. "Institutional Investors and Firm Valuation: Evidence from Latin America," Galeras. Working Papers Series 040, Universidad de Los Andes. Facultad de Administración. School of Management.
    16. Rosalia Santulli & Mariateresa Torchia & Andrea Calabrò & Carmen Gallucci, 2019. "Family ownership concentration and firm internationalization: integrating principal-principal and socioemotional wealth perspectives," Journal of International Entrepreneurship, Springer, vol. 17(2), pages 220-248, June.
    17. Shah, Muhammad Hashim & Xiao, Zuoping & Abdullah, & Quresh, Shakir & Ahmad, Mushtaq, 2020. "Internal pyramid structure, contract enforcement, minority investor protection, and firms’ performance: Evidence from emerging economies," Research in International Business and Finance, Elsevier, vol. 52(C).
    18. Rossi, Fabrizio & Barth, James R. & Cebula, Richard J., 2018. "Do shareholder coalitions affect agency costs? Evidence from Italian-listed companies," Research in International Business and Finance, Elsevier, vol. 46(C), pages 181-200.
    19. Christian Engelen, 2015. "The effects of managerial discretion on moral hazard related behaviour: German evidence on agency costs," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(4), pages 927-960, November.
    20. Giorgio Gotti & Stacy Mastrolia, 2010. "Regulatory intervention and the effect of changes in corporate governance on firm decisions and market reactions," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 14(4), pages 379-407, November.

    More about this item

    Keywords

    corporate governance; ownership structure; state ownership; agency conflict; foreign ownership; market capitalization; empirical analysis; panel data;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:url:upravl:v:12:y:2021:i:2:p:35-42. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victor Blaginin (email available below). General contact details of provider: https://edirc.repec.org/data/usueeru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.