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Incorporation of rating parameters into the perpetuity range of the BrusovFilatovaOrekhova modern theory of capital structure

Brusov P.N. Financial University under Government of Russian Federation, Moscow, Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. Financial University under Government of Russian Federation, Moscow, Russian Federation ( tvfilatova@fa.ru )

Orekhova N.P. Southern Federal University, Rostov-on-Don, Russian Federation ( fet_mir@bk.ru )

Kulik V.L. Financial University under Government of Russian Federation, Moscow, Russian Federation ( venya.kulik@mail.ru )

Journal: Finance and credit, #40, 2017

Importance The research focuses on the existing systems of rating, respective methodologies and weaknesses of these methods.
Objectives We modify the methodology embedded into the existing rating systems and devise a brand new approach based on the appropriate application to discounted cash flows, discount of rating parameters, correct assessment of discount rates in line with financial ratios.
Methods The research deals with the perpetuity range of the BrusovFilatovaOrekhova modern theory of capital cost and capital structure. We also rely upon the modified theory for rating purposes and ranking coefficients.
Results We modify the methodology of the existing rating systems and devise an absolutely new approach to it.
Conclusions and Relevance Modifying the rating methodology, we make our own assessments more accurate and unbiased. Using the toolkit of the advanced theories, we reach new horizons of the rating practice, since it enables the rating segment to predominantly use quantitative methods. The proposed approach should be applied by all rating agencies in assessing the creditworthiness of issuers.


Is it possible to increase investment efficiency through increasing the rate of corporate profit tax?

Brusov P.N. Financial University under Government of Russian Federation, Moscow, Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. Financial University under Government of Russian Federation, Moscow, Russian Federation ( mfilatova@fa.ru )

Orekhova N.P. Universities Research Consortium in Russian South, Rostov-on-Don, Russian Federation ( Natali_Orehova@Bk.Ru )

Kulik V.L. Financial University under Government of Russian Federation, Moscow, Russian Federation ( venya.kulik@mail.ru )

Journal: Finance and credit, #19, 2015

Importance The current condition of the Russian economy enhances the relevance of the issue of corporate profit tax impact on a company's investment activity.
     Objectives The paper examines the effect of changes in the rate of corporate profit tax on investment efficiency, and aims at detecting the anomalies of the influence.
     Methods We made all calculations within the modern theory of capital cost and capital structure developed by Brusov, Filatova, and Orekhova, and under our unique modern investment models. We consider the matter from the viewpoint of equity capital owners, and equity and debt capital owners. In the analysis of long-term projects, we use equity value or WACC calculated by Modigliani and Miller, as a discount rate. When analyzing projects with arbitrary duration, the discount rate is the cost of capital obtained under the Brusov - Filatova - Orekhova theory.
     Results We show that in both cases, i.e. in long-term projects and projects with optional duration, an increase in the rate of corporate profit tax changes the nature of the NPV dependence on leverage at some value of t* : there is a transition from the decreasing function NPV(L), when t < t* , to the increasing function NPV(L), when t > t*b . At higher leverage levels, we observe a qualitatively new effect in investments, i.e. the growth of investment efficiency as the rate of corporate profit tax goes up.
     Conclusions and Relevance
The discovered qualitatively new effects in investments are very important from a theoretical viewpoint, and may lead to qualitatively new managerial decisions on investment optimization.


The mechanism of formation of optimal capital structure -nontraditional for the compromise theory

Brusov P.N. Financial University under Government of Russian Federation, Moscow, Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. Financial University under Government of Russian Federation, Moscow, Russian Federation ( mfilatova@fa.ru )

Orekhova N.P. Institute of Management, Business and Law, Rostov on Don, Russian Federation ( Natali_Orehova@Bk.Ru )

Journal: Finance and credit, #21, 2014

The article considers the issue of searches of other mechanisms of formation of optimum capital structure in the conditions of insolvency of the known classical compromise theory. The author offers the real mechanisms connected to decrease of loan cost with leverage which is defined (in some range of leverage levels) by growth of loans volume. This mechanism is absent in Modigliani - Miller's perpetuity limit in the modified version of the theory and exists within more general modern theory of cost and structure of the company capital of Brusov - Filatova-Orekhova (BFO theory).


Analysis of investment projects for owners of equity in approximation of Modigliani Miller

Brusov P.N. Doctor of Physical and Mathematical Sciences, Professor of Department Applied Mathematics, the Financial University under the Government of Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. PhD in Economics, Professor of Department Financial Management, the Financial University under the Government of Russian Federation ( mfilatova@fa.ru )

Orekhova N.P. PhD of Physical and Mathematical Sciences, Head of Department Financial and Economical Technology, the Institute of Business, Management and Law, Rostov n/D ( Natali_Orehova@Bk.Ru )

Brusov P.P. PhD of Physical and Mathematical Sciences, Leading Scientist, the Southern Federal University ( ppb@bmail.ru )

Brusova A.P. Head of Department Financial Settlements and Risks, JSC MTS ( flowerik1@yandex.ru )

Dolgov D.M. Student, Department Financial Management, the Financial University under the Government of the Russian Federation ( infoddisney@gmail.com )

Journal: Financial Analytics: Science and Experience, #6, 2013

The numerical analysis of the models of an assessment of dependence of efficiency of investments developed from loan financing is carried out. Consideration is presented with the point of view of owners in Modelyani's approach Miller.


Modern approach to dividend policy of company

Brusov P.N. Doctor of Physics and Mathematics, Professor of department "Applied Mathematics", the Financial University under the Government of the Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. PhD in Economics, Professor of department "Financial Management", the Financial University under the Government of the Russian Federation ( mfilatova@fa.ru )

Orekhova N.P. PhD in Physics and Mathematics, Leading Researcher, the Financial University under the Government of the Russian Federation ( Natali_orehova@bk.ru )

Brusov P.P. Leading Researcher, the Southern Federal University ( ppb@bmail.ru )

Brusova A.P. Head of department "Financial Settlements and Risks", MTS ( flowerik1@yandex.ru )

Journal: Finance and credit, #37, 2012

In the article the modern approach to dividend policy of the company, based on real estimation of cost of own capital of the company, its comparison with profitability of planned investments is offered. It will allow to return to economic essence of dividends as payments to shareholders for use of the share capital. In this case, the existing theories of dividend policy (the theory of irrelevance of dividends, preferred dividends, tax differentiation, signaling theory of dividends, etc.) undergo modification.


Investigation of efficiency of investment projects for owners of equity and debt (Modigliani and Miller approximation)

Brusov P.N. Doctor of Physical and Mathematical Sciences, Professor, Department "Applied Mathematics", the Financial University under the Government of the Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. PhD in Economics, Professor, Department "Financial Management", the Financial University under the Government of the Russian Federation ( mfilatova@fa.ru )

Orekhova N.P. PhD of Physical and Mathematical Sciences, Head of Department "Financial and Economical Technology", the Institute of Business, Management and Law, Rostov n/D ( Natali_Orehova@Bk.Ru )

Brusov P.P. PhD of Physical and Mathematical Sciences, Leading Scientist, the Southern Federal University ( ppb@bmail.ru )

Brusova A.P. Head of Department "Financial Settlements and Risks", JSC "MTS" ( flowerik1@yandex.ru )

Dolgov D.M. Student, Department "Financial Management", the Financial University under the Government of the Russian Federation ( infoddisney@gmail.com )

Journal: Financial Analytics: Science and Experience, #8, 2013

The numerical analysis of the models of an assessment of dependence of efficiency of investments developed by authors from loan financing is carried out. Consideration is conducted with the point of view of owners of own and loan capital in Modigliani's approach - Miller.


Influence of inflation on capital cost and company capitalization

Brusov P.N. Doctor of Physical and Mathematical Sciences, Professor of department "Applied mathematics", the Financial University under the Government of Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. PhD in Economics, Professor of department "Financial Management", The Financial University under the Government of Russian Federation ( mfilatova@fa.ru )

Orekhova N.P. PhD of Physical and Mathematical Sciences, Head of department, The Institute of Management, Business and Law ( Natali_orehova@bk.ru )

Brusov P.P. PhD of Physical and Mathematical Sciences, Head of department, The Southen Federal University ( ppb@bmail.ru )

Brusova A.P. Head of department "Financial Settlements and Risks", MTS ( flowerik1@yandex.ru )

Journal: Finance and credit, #47, 2012

In the article it is investigated influence of inflation on the cost of the capital of the company and its capitalization within Modigliani-Miller's theory and within the modern theory of cost and structure of the capital of Brusov-Filatova-Orekhova. It is shown that inflation not only increases the size of cost of own capital of the company and the average cost of the capital, but also changes their dependence on leverage. In particular, it increases the growth rate of cost of own capital of the company with leverage. Capitalization of the company, taking into account inflation decreases.


The cost and capital structure in post-Modigliani - Miller era

Brusov P.N. professor of chair Applied mathematics, Financial University under the Government of Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. professor of chair Financial management, Financial University under the Government of Russian Federation ( mfilatova@fa.ru )

Orekhova N.P. Ph.D, president of Eda company ( Natali_orehova@bk.ru )

Brusov P.P. Ph.D, leading scientist of Southen federal university ( ppb@bmail.ru )

Brusova A.P. Head of the department of financial settlements and risks of MTS ( flowerik1@yandex.ru )

Journal: Financial Analytics: Science and Experience, #37, 2011

After accepting more than half century back the conclusions of the theory Of Modigliani - Miller, financiers in the course of time forgot the limitations and use it without their calculation. This led to the serious divergence with the real economy. The authors remove one of the most serious limitations, connected with the assumption of perpetuity of the company and they show that the calculation of the deadline of existence of company leads to a fundamental change in the entire theory of Modigliani - Miller. The concept created by the authors allowed study the dependence of the cost of equity of the company and its weighted average cost for the first time that was impossible in principle within perpetuity theory.


Optimizing structure of investment of company in telecommunication sector

Brusov P.N. Doctor of Physical and Mathematical Sciences, Professor of department "Applied Mathematics", the Financial University under the Government of the Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. PhD in Economic Sciences, Professor of department "Financial Management", the Financial University under the Government of the Russian Federation ( mfilatova@fa.ru )

Orekhova N.P. PhD of Physical and Mathematical Sciences, Head of department "Financial and Economical Technology", the Institute of Business, Management and Law, Rostov n/D ( Natali_Orehova@Bk.Ru )

Brusov P.P. PhD of Physical and Mathematical Sciences, Leading Scientist, the Southern Federal University ( ppb@bmail.ru )

Brusova A.P. Head of department "Financial Settlements and Risks", JSC "MTS" ( flowerik1@yandex.ru )

Dolgov D.M. Student of department "Financial Management", the Financial University under the Government of the Russian Federation ( infoddisney@gmail.com )

Journal: Financial Analytics: Science and Experience, #2, 2013

The models of an assessment of dependence of efficiency of investments developed by authors from extra financing are applied to the analysis of efficiency of investments of one of the telecommunication companies for 2010-2012 from the point of view of an optimality of structure of investments. The analysis showed that only in 2011 the structure of investments of the company was close to the optimum.


Abnormal dependence of cost of equity capital of the company on leverage

Brusov P.N. Doctor of Physical and Mathematical Sciences, Professor of department "Applied Mathematics", the Financial University under the Government of the Russian Federation ( pnb1983@yahoo.com )

Filatova T.V. PhD in Economics, Professor of department "Financial management", the Financial University under the Government of the Russian Federation ( mfilatova@fa.ru )

Dolgov D.M. Student of department "Financial management", the Financial University under the Government of the Russian Federation ( infoddisney@gmail.com )

Orekhova N.P. PhD of Physical and Mathematical Sciences, Senior Research Fellow, the Southern Federal University ( Natali_Orehova@Bk.Ru )

Brusov P.P. PhD of Physical and Mathematical Sciences, Senior Research Fellow, the Southern Federal University ( ppb@bmail.ru )

Brusova A.P. Head of department "Financial Settlements and Risks", JSC "MTS" ( flowerik1@yandex.ru )

Journal: Financial Analytics: Science and Experience, #26, 2012

Qualitatively new effect in corporate finance is found: reduction of cost of own capital with leverage growth. In the article complete research of effect within Brusov-Filatova-Orekhova theory is carried out. At some ratios between cost of loan and share capital the open effect takes place at the rates of a profit tax existing in the western countries and Russia that provides its practical value.


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