Release:
2016, Vol. 2. №4About the author:
Denis A. Buyvolov, Postgraduate Student, Senior Teacher, Department of World Economy and International Business, University of Tyumen; denbstudying@gmail.comAbstract:
The aim of the paper is to identify the main factors that have a significant impact on the market capitalization of telecommunication companies. In real life, the interests of shareholders are not the same. For example, a company's shareholders are interested in the steady growth of their income in the form of stock growth and a constant dividend payment. At the same time, top managers are interested primarily in generating income which depends on the company's short-term results. As a result, in order to obtain excess profits in the short term, they sacrifice the stable growth of the company in the long run. This situation leads to the conflict of interest. To mitigate it, the top management of the company needs to know exactly which factors have the greatest impact on the market capitalization of the companies. The top managers also should focus on these factors to create long-term growth in the market capitalization of the company and sustainable growth of the shareholders’ wealth.
The author selected a number of factors from the Barra model and the EVA model, using the multifactor analysis. These factors have the greatest impact on the market capitalization of telecommunication companies. As a result, the author built the regression model of the market capitalization of telecommunication companies. The results of the research showed that such factors as total revenue, amount of company total debt, national currency rate, and value of interest rates have the greatest impact on the market capitalization. When increased influence of these factors, the market capitalization of a company is not only able to return to the pre-crisis levels, but also is able to show steady growth, which will increase the wealth of the shareholders and mitigate conflicts of interest among them.
Keywords:
References:
