Influence of cost drivers on value-oriented management of investment activity of companies
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Date
2019
Journal Title
Journal ISSN
Volume Title
Publisher
LLC «Consulting Publishing Company «Business Perspectives»
Abstract
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.
Description
Keywords
probit model, modeling of assessments, shareholders` profitability, cost multipliers
Citation
Influence of cost drivers on value-oriented management of investment activity of companies / Kateryna Andriushchenko, Mariia Tepliuk, Svitlana Boniar [et al.] // Investment Management and Financial Innovations. – 2019. – Vol. 16, Is. 3. – P. 353–364.