IDEAS home Printed from https://ideas.repec.org/h/spr/prbchp/978-3-031-30498-9_22.html
   My bibliography  Save this book chapter

Concept of Taking Risk-Tolerant Financial Decisions Under Elevated Uncertainty

In: Finance, Economics, and Industry for Sustainable Development

Author

Listed:
  • Vladimir A. Kunin

    (Saint-Petersburg University of Management Technologies and Economics)

  • Stanislav I. Peshko

    (Saint-Petersburg University of Management Technologies and Economics)

Abstract

Under the uncertainty caused by external factors and heightened external risks, ensuring the sustainable competitive development of a corporation largely depends on the financial decisions taken. These decisions should be focused on improving the financial performance of the corporation while preventing the occurrence of risk of loss of its financial stability. Achieving this goal largely depends on the level of structural risk, the importance of effective management of which grows significantly under the conditions of strong market volatility which manifests itself under the impact of heightened external risks. In this regard, it is of particular relevance to ensure that risk-tolerant financial decisions are taken aiming at the sustainable effective development of the company under the conditions of high uncertainty and risks, and taking into account potential changes in the external environment and, as a consequence, the level of structural risk. The purpose of this study is to develop a methodology for taking risk-tolerant financial decisions focused on streamlining the leverages on private financial risks of companies in the context of the most reasonable limitation of these risks under the elevated uncertainty, and to advise on the practical application of the methodology developed. The study has evaluated the joint impact of operating and financial leverages on the risk of loss of financial stability of the company and the maximum permissible value of the financial leverage arm above which the risk of loss of financial stability becomes unacceptable. The methodology was proposed and an algorithm was developed for taking financial risk-tolerant decisions on managing the capital structure, and a concept was proposed for implementing financial decisions on managing the company’s debt capital and dividend policy under uncertainty. The impact of a change in the dividend policy on the financial leverage arm and financial profitability of the company was evaluated. Advice was given with regard to taking risk-tolerant financial decisions under the elevated uncertainty. The results obtained may be used by companies when taking their financial decisions under the uncertainty and economic turbulence. The study methodology is based on a dialectical systemic approach using logical, factor and comparative analyses, methods of probability theory and mathematical statistics, data synthesis and grouping.

Suggested Citation

  • Vladimir A. Kunin & Stanislav I. Peshko, 2023. "Concept of Taking Risk-Tolerant Financial Decisions Under Elevated Uncertainty," Springer Proceedings in Business and Economics, in: Anna Rumyantseva & Hod Anyigba & Elena Sintsova & Natalia Vasilenko (ed.), Finance, Economics, and Industry for Sustainable Development, pages 245-260, Springer.
    • Handle: RePEc:spr:prbchp:978-3-031-30498-9_22
    DOI: 10.1007/978-3-031-30498-9_22
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    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:spr:prbchp:978-3-031-30498-9_22. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.