IDEAS home Printed from https://ideas.repec.org/a/ura/ecregj/v1y2018i4p1411-1423.html
   My bibliography  Save this article

Investment Attractiveness and Sustainable Growth of Telecommunication Companies: Value-Oriented Approach

Author

Listed:
  • Irina Matyash

    (Altai State University)

Abstract

The growing complexity and uncertainty of economic processes in the digital economy require an increase in the accuracy of the company’s performance. This explains the interest in the development of the methods of value-based management (VBM). The development of the digital economy is accompanied by an increase of the update requirements of products and technologies. This makes it necessary to assess the profit potential of companies as an internal source of capital accumulation funds and as the base for investment attractiveness of projects. I consider how to refine the method of economic value added taking into account the market rate of profit reinvestment. For an integrated assessment of the factors of the capital present value and the factors capital reinvestment, I propose an indicator of the systemic value added (profitability added) of a company. Accelerated profit shifting through dividends reflects how business owners assess their business risks as well as characterizes the possibilities for modernization in the conditions of restricted external financing. Therefore, that is of interest to estimate the investment attractiveness of companies. The proposed approach allows assessing sustainable growth prospects taking into account the balance of the interests of strategic stakeholders in the development of the policy for the profit distribution. The proposed approach was applied for the study of four Russian companies in the telecommunications industry in 2015–2016. Analysing the companies’ financial statements, I show that the analysis of the factors of economic value added specifies the assessment of the economic potential of a business. I propose to classify four levels of sustainable growth depending on the accepted strategy of net profit distribution in a company. The table of equity management strategies has resulted from the analysis. I have determined the indicators that allow monitoring the dynamics of the risk of investing in a company. The proposed approach specifies criteria for the fundamental analysis of issuing companies, expands the possibilities for the assessment and forecast of investment attractiveness of shares and debt instruments of companies.

Suggested Citation

  • Irina Matyash, 2018. "Investment Attractiveness and Sustainable Growth of Telecommunication Companies: Value-Oriented Approach," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 1411-1423.
    • Handle: RePEc:ura:ecregj:v:1:y:2018:i:4:p:1411-1423
    as

    Download full text from publisher

    File URL: http://economyofregion.ru/Data/Issues/ER2018/December_2018/ERDecember2018_1411_1423.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Magni, Carlo Alberto, 2009. "Splitting up value: A critical review of residual income theories," European Journal of Operational Research, Elsevier, vol. 198(1), pages 1-22, October.
    2. Simon, Herbert A., 1952. "Comments on the Theory of Organizations," American Political Science Review, Cambridge University Press, vol. 46(4), pages 1130-1139, December.
    3. Fernandez, Pablo, 2002. "Valuation Methods and Shareholder Value Creation," Elsevier Monographs, Elsevier, edition 1, number 9780122538414.
    4. Fernández , Pablo, 2002. "Valuing companies by cash flow discounting: Ten methods and nine theories," IESE Research Papers D/451, IESE Business School.
    5. Thomas Dyllick & Kai Hockerts, 2002. "Beyond the business case for corporate sustainability," Business Strategy and the Environment, Wiley Blackwell, vol. 11(2), pages 130-141, March.
    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. Shuaitao Jiao & Qiubi Sun, 2021. "Digital Economic Development and Its Impact on Econimic Growth in China: Research Based on the Prespective of Sustainability," Sustainability, MDPI, vol. 13(18), pages 1-19, September.

    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. Magni, Carlo Alberto, 2009. "Splitting up value: A critical review of residual income theories," European Journal of Operational Research, Elsevier, vol. 198(1), pages 1-22, October.
    2. Magni, Carlo Alberto, 2010. "Residual income and value creation: An investigation into the lost-capital paradigm," European Journal of Operational Research, Elsevier, vol. 201(2), pages 505-519, March.
    3. Fernandez, Pablo, 2006. "The correct value of tax shields: An analysis of 23 theories," IESE Research Papers D/628, IESE Business School.
    4. Pablo Fernandez, 2011. "How to Value a Seasonal Company’s Discounting Cash Flows," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 27-52.
    5. Ioana Gutu & Daniela Tatiana Agheorghiesei & Alexandru Tugui, 2023. "Assessment of a Workforce Sustainability Tool through Leadership and Digitalization," IJERPH, MDPI, vol. 20(2), pages 1-30, January.
    6. Jung Eon Kwon & Hyung Rok Woo, 2017. "The Impact of Flipped Learning on Cooperative and Competitive Mindsets," Sustainability, MDPI, vol. 10(1), pages 1-15, December.
    7. Rambaud, Alexandre & Richard, Jacques, 2015. "The “Triple Depreciation Line” instead of the “Triple Bottom Line”: Towards a genuine integrated reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 33(C), pages 92-116.
    8. Magni, Carlo Alberto, 2015. "Investment, financing and the role of ROA and WACC in value creation," European Journal of Operational Research, Elsevier, vol. 244(3), pages 855-866.
    9. Maria Björklund & Helena Forslund, 2019. "Challenges Addressed by Swedish Third-Party Logistics Providers Conducting Sustainable Logistics Business Cases," Sustainability, MDPI, vol. 11(9), pages 1-15, May.
    10. Merriam Haffar & Cory Searcy, 2018. "Target‐setting for ecological resilience: Are companies setting environmental sustainability targets in line with planetary thresholds?," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 1079-1092, November.
    11. Pishchulov, Grigory & Trautrims, Alexander & Chesney, Thomas & Gold, Stefan & Schwab, Leila, 2019. "The Voting Analytic Hierarchy Process revisited: A revised method with application to sustainable supplier selection," International Journal of Production Economics, Elsevier, vol. 211(C), pages 166-179.
    12. Mara Del Baldo & Maria-Gabriella Baldarelli, 2017. "Renewing and improving the business model toward sustainability in theory and practice," International Journal of Corporate Social Responsibility, Springer, vol. 2(1), pages 1-13, December.
    13. Per Engelseth & Richard Glavee-Geo & Artur Janusz & Enoch Niboi, 2020. "The Emergent Nature of Networked Sustainable Procurement," Sustainability, MDPI, vol. 13(1), pages 1-18, December.
    14. Francesco Di Maddaloni & Roya Derakhshan, 2019. "A Leap from Negative to Positive Bond. A Step towards Project Sustainability," Administrative Sciences, MDPI, vol. 9(2), pages 1-19, June.
    15. Simone Carmine & Valentina De Marchi, 2023. "Reviewing Paradox Theory in Corporate Sustainability Toward a Systems Perspective," Journal of Business Ethics, Springer, vol. 184(1), pages 139-158, April.
    16. Bert Scholtens & Feng‐Ching Kang, 2013. "Corporate Social Responsibility and Earnings Management: Evidence from Asian Economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(2), pages 95-112, March.
    17. Hsueh, Che-Fu, 2014. "Improving corporate social responsibility in a supply chain through a new revenue sharing contract," International Journal of Production Economics, Elsevier, vol. 151(C), pages 214-222.
    18. Lamin B. Ceesay, 2020. "Exploring the Influence of NGOs in Corporate Sustainability Adoption: Institutional-Legitimacy Perspective," Jindal Journal of Business Research, , vol. 9(2), pages 135-147, December.
    19. Fabien Martinez, 2014. "Corporate strategy and the environment: towards a four-dimensional compatibility model for fostering green management decisions," Post-Print hal-02887618, HAL.
    20. Veronica Devenin & Constanza Bianchi, 2018. "Soccer fields? What for? Effectiveness of corporate social responsibility initiatives in the mining industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(5), pages 866-879, September.

    More about this item

    Keywords

    corporate finance; firm value; value-oriented approach; value-added; stakeholders; reinvestment; dividend policy; dividend yield; sustainable growth of the company; investment attractiveness;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    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:ura:ecregj:v:1:y:2018:i:4:p:1411-1423. 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: Alexey Naydenov (email available below). General contact details of provider: http://www.economyofregion.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.