The effect of production diversification on the investment attractiveness of Russian companies - Дипломная работа

ПЕРМСКИЙ ФИЛИАЛ ФЕДЕРАЛЬНОГО ГОСУДАРСТВЕННОГО АВТОНОМНОГО ОБРАЗОВАТЕЛЬНОГО УЧРЕЖДЕНИЯ ВЫСШЕГО ОБРАЗОВАНИЯ «НАЦИОНАЛЬНЫЙ ИССЛЕДОВАТЕЛЬСКИЙ УНИВЕРСИТЕТ «ВЫСШАЯ ШКОЛА ЭКОНОМИКИ» Факультет экономики, менеджмента и бизнес-информатики Выпускная квалификационная работа Влияние диверсификации на инвестиционную привлекательность российских компаний (The Effect of Production Diversification on the Investment Attractiveness of Russian Companies) Рецензент Барахас Алонсо Анхель Антонио Руководитель М.А. Шелунцова Пермь 2016 Outline Introduction 1. Theoretical background 1.1 The concept of investment attractiveness 1.2 The concept of production diversification 1.3 The determinants of the investment attractiveness 2. Research Design 3. Methodology 3.1 Preliminary data analysis 3.2 Econometric Model 4. Empirical Results Conclusion References Appendix Introduction The investment attractiveness in terms of modern business stands for one of the most essential features of the company’s performance due to the fact that it has an apparent influence on the prospects of a firm for further development, competitive abilities, and financial stability. The adequate investment policy of the company gives opportunities to raise funds, direct the money appropriately and to reinforce the financial position. To retain its status and to reach the leadership an enterprise needs to permanently cope with up-to-date technologies and broaden the sphere of activity. Under these conditions, a moment occurs when the further extension is unfeasible without an extra flow of investments. The involvement of supplies of money gives a company competitive advantage and often becomes a significant tool for growth. At the same time, every external investor faces the problem of choice which company to invest in. For making up the mind he needs to get and compare the estimations regarding the investment attractiveness of the potential organizations. In this case, the investment attractiveness is not only a matter to manage but also a criteria or evaluation for making the decision from the investors’ point of view. One of the possible alternatives for a firm to increase its investment attractiveness is the information disclosure, both financial and nonfinancial. The higher is the degree of disclosure, the more transparent the company seems for investors. This transparency is somehow referred to the guarantee of the investment’s’ safety. If there is more information about the enterprise, investors tend to be more confident. Nowadays many companies provide a huge amount of information, which is not always easy to interpret and understand. The companies’ diversification, the existence of different financial and nonfinancial components claim for solid and comprehensive approach for making investment decisions. In this situation, the investment attractiveness is put to the forefront. With the rash evolution of the financial sector, the attractiveness of the enterprises has become determined by different components. However, their influence is not similar across various markets or countries. In foreign researches, mainly firms’ financial ratios are considered, whereas in Russia the attractiveness of regions is of substantial interest. Besides, the effect of diversification was poorly studied for Russian enterprises and the researches of foreign markets were conducted much time ago. What is more, the theory claims that diversification implies value-enhancing as well as value-reducing effect. Thus, it is relevant to explore, if production diversification increases the firms’ investment attractiveness taking into account several control variables, which will be introduced further. The understanding of the impact of the factors, which designate the investors’ potential benefits, gives a deeper knowledge of this economic phenomenon and a chance to manage the investment attractiveness of the company in a more efficient way. The purpose of this paper is to assess the relative importance of the production diversification and other factors determining the investment attractiveness of a company. The goal is not just to develop a kind of theory, rather than to see why these determinants are so considerable or not. In this paper, the following issues are examined: a) Examination of the investment attractiveness and diversification’s concepts b) Formulating initial hypotheses c) Description of the given data set d) Model parametrization and specification e) Model identification and verification f) Economic interpretation The study is based on the econometric estimation of the panel data. The data comprises the 174 Russian companies for the period from 2012 to 2014, which was collected from the Thomson database as well as from the financial reports of the companies in question. The paper consists of two sections: theoretical and practical. The former includes the definition of the investment attractiveness, the methods of its evaluation, the explanation of the diversification co