Vol 14, No 1 (2020)

Although corporate capital structure has been intriguing to scientists for a number of years, very little research has been conducted on the topic for companies in emerging markets. The purpose of this paper is to investigate the determinants of capital structure using a sample of 195 non-financial firms from emerging markets in 2012-2016.

The inclusion of a specific dataset from Chinese companies lends vital focus to this investigation and provides crucial ballast for the investigative function. The final sample contains data on 57 China companies and 90 other companies of emerging markets. Our article focusses on identifying the determinants of capital structure of Chinese companies in comparison with companies of other BRIC countries (Brazil, Russia, India), and sets out a series of hypotheses concerning capital structure with domestic and international variables. We compare and contrast our data using a series of custom evaluation models based on linear regressions.

The results confirm positive impact of tangibility on total debt ratio due to a high share of capital-intensive industries in the sample. It is revealed that growth rates and firm size have positive impacts on financial leverage in Chinese companies as compared to other BRIC countries, and these effects are stronger in capital-intensive industries. We illustrate how a strong negative impact of ROA has increased in recent years, and connect this phenomenon to a considerable decrease in lending rates following a large-scale stimulus program which encouraged Chinese companies to borrow money instead of relying on retained earnings. The presence of the Chinese state in the ownership structure of companies is revealed to be significant for the majority of Chinese companies, especially for the oil and gas and metallurgical sectors.

Our conclusions highlight the importance of government policies and special market conditions in explaining the financing behaviour of companies in emerging countries like China.  While capital structure choice varies significantly across industries, nevertheless the differences between Chinese and other BRIC companies reflect the differences in the institutional structure of financing mechanisms in countries. This research and evaluation is especially timely considering the increased focus on Chinese commercial exposure on the world stage, a tendency which is bound to increase research interest in the near future across a range of disciplines. As such, our study and our broad range of conclusions will prove invaluable for students, researchers, policymakers, and decision makers in business, commerce, politics and academia at all levels.

This article presents an evaluation of the usefulness of information disclosed in the reports of pharmaceutical companies. The main purposes of this research is to assess the transparency of the proposed metric, assess the inter-firm comparability of non-financial reporting data, and to identify the practical usefulness of the disclosed information for international pharmaceutical companies.

The methodological basis of the research is the harmonisation of the requirements of business practice standards with financial reporting standards. This paper utilises an analytical method based around the proportional-typical selection of stable structured performance indicators for companies. The authors were not limited to information requests from investors in one country, individual companies, or the priority areas of interests of relevant persons or entities. Rather, the study approach was implemented and designed with the multilateral considerations of a plurality of stakeholders in mind. The research database was compiled with data from the reports of five companies (Johnson & Johnson, Novartis AG, Merck KGaA, Sanofi, and Takeda Pharmaceutical Co. Ltd.) retrieved from the Global Reporting Initiative Database. Data from the financial reports of 20 pharmaceutical companies, retrieved from the Access To Medicine Index System, was utilised, with the sample data spanning the years from 2014 and 2016.

The results of the study indicate that the total position of the 5 companies studied has increased from 8th to 6th place. The result of the ratio of growth rates as concerns their total revenue, capitalisation, and long-term capital is positive when compared with the growth rate of the quality of their disclosure of non-financial indicators. The strongest such relationship is in the area of attracting long-term capital, followed by the growth in capitalization, and the smallest relationship is in the area of revenue growth. The format presented here, of the minimum required set of harmonised indicators, helps to increase the confidence of stakeholders in the financial and non-financial information of socially responsible companies.

The novelty of the results obtained in this study consists in using a metric expression of the quality of reporting indicators to assess their usefulness in the business practice of companies with a production profile. The results obtained allow us to make a generalised conclusion that useful information, generated on the basis of the harmonisation of structured data from financial and non-financial statements, contributes to increasing the level of business activity and its comprehensive performance for all parties involved in the company's affairs.

The insurance company is a financial intermediary between stakeholders - a set of participants in the insurance process and those who have received the right to insurance payment, as well as insuring parties who purchase insurance coverage and shareholders whose capital is involved in its guarantee. Satisfaction of stakeholders creates a company’s free access to exchanged resources, thereby optimizing operations and increasing the efficiency of capital use. The implementation of the Total Quality Management (TQM) system, which could help achieve the goal, is complicated in insurance companies by dividing the personnel who create the insurance service, by the factor of time, since it is possible to check the quality only after the client has used it, which does not always arise in insurance, and often by the factor of location of units at geographically different points, which makes it virtually impossible for the simultaneous and equal participation of personnel in production processes, that requires innovative management tools.

The purpose of this study is to study the effect of introducing a Total Quality Management (TQM) system and a balanced scorecard (BSC) on the activities of an insurance company, including the one aimed at achieving the satisfaction of its stakeholders. Using the methods of induction and synthesis of freely available data of SOGAZ, Rosgosstrakh, and ROSNO companies, a complex of dependent corporate goals was identified that were ranked relative to the organizational level.

The results of the study allow concluding that the concept of balanced indicators allows to indicatively monitor the quality of meeting the interests of the main stakeholders of the company, which creates new effective tools for improving resource exchange and does not allow distortions in management. The integration of strategic planning and TQM opens up new market growth opportunities for insurance companies in the context of a limited portfolio of services for a strictly limited audience. The paper provides specific recommendations for organizations to resolve problems that impede the successful implementation of TQM.

The results of this study can be used by officials of insurance companies in developing strategies and tactics for their development, including the implementation of BSC and TQM, as well as scientists for a deeper study of the results of the implementation of BSC and TQM, both in the insurance industry and other sectors of the economy.

In this study, we propose to model the operation of a service concession arrangement in the economic area of municipal heat supply utilities. We offer a scheme of interaction between the concedent and concessionaire in this concessionary arrangement. Currently, the existing regulations regarding the temperature of coolant focusses on the daily average outdoor temperature, and the determination of a “normative” demand for heat energy. On any day of the heating period, this demand is a random variable, whose distribution can be described through the distribution of daily average air temperature.

In our model, heat energy is paid for at a fixed price, and the concessionaire pays a penalty for each unit of unsatisfied normative demand. The price and penalty values are the concession parameters, and are determined by the concedent. The concedent’s goal is to minimise the thermal energy cost; the concessionaire’s purpose is to maximise profit. The interaction is formalised as a two-move game model. First, the concedent determines the price and the value of the penalty. Then the concessionaire selects the capacity to be created. The concession’s parameters should be set so that the individual rationality and incentive compatibility conditions are met.

Our results prove the existence of Stackelberg equilibrium, and we derive the relevant formulas for computing its parameters. In equilibrium, the optimum capacity for the concessionaire provides a sufficient probability of meeting demand. The price of thermal energy is minimal under this condition. We also formulate a one-parameter model (thermal energy price as a parameter), which is based on a typical concession scheme. In the two-parameter model, the equilibrium capacity and price do not exceed the corresponding parameters of the one-parameter model. The main advantage of the two-parameter model is an “embedded” economic mechanism that prevents the concessionaire’s opportunistic behaviour. By contrast, in the one-parameter model there is no such mechanism.

The proposed approach can be applied to a concession for the production of any good or service, provided the concerned parties are interested in the availability and reliability of meeting a corresponding need, which may be described as a random variable. However, typical concession schemes do not penalise unsatisfied demand, so the implementation of our two-parametric model is possible only after modification of the pertinent concession legislation.

This article is devoted to development of mathematical models for resolving an actual scientific challenge in the field of corporate finance. This involves substantiating taxation policies for the counter-acting tax planning of multinational companies (MNC), and then devising and articulating the appropriate international taxation scheme, as evaluated from the position of national welfare policy. Based on an analysis of existing models of international taxation, and on the peculiarities of the actual mechanism of capital movement tax regulation, new models with equilibrium postulated have been developed.

The primary mechanisms of this research involve the following considerations: (1) examination of an approach targeted at the determination of the final outcomes of international taxation from the perspective of national economies; (2) measures of tax planning on the part of MNCs, and corresponding counter-acting measures to the tax planning applied by governments, are taken as a complex.

Our results indicate that because a government uses rules of controlled transactions, in order to counter-act MNCs’ tax planning, for the government the final outcome from an application of these rules may be negative. This is due to a possibility of MNCs’ development in convenient and offshore jurisdictions. This finding is illustrated by means of an approbation of models with a case study involving a three-tier structure.
Further to this point, instead of additional revenues, a government is at a risk of a shrinking tax base and a reduction in budget revenues; and moreover from the perspective of national welfare, the additional loss of revenues and capital of MNCs. Therefore there is a significant importance in forming rules for MNC taxation policies which would focus not on taxes as such, but would focus on trying to keep capital within the territory and/or would facilitate the return of earlier divested income. This could be attempted, for example, by using the secondary adjustment rule in conjunction with a minimum tax on return.

The novelty of this research resides in the specificity of our investigation and the applicability of our conclusions to the practical challenges of international taxation and national revenue policies. The peculiarities of this economic moment and the crucial challenges for national governments in dealing with MNCs and the digital economy underline the significance of this study. Our results expand and develop the existing literature in this ever-crucial area be of immediate use to policymakers, academics and administrators involved in national and international taxation, finance, economics, and analysis.