The cost of equity of Ukrainian food processing companies as a measure of competitiveness

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F47813059%3A19520%2F23%3AA0000392" target="_blank" >RIV/47813059:19520/23:A0000392 - isvavai.cz</a>

Výsledek na webu

<a href="https://www.cjournal.cz/index.php?hid=clanek&bid=aktualni&cid=490&cp=" target="_blank" >https://www.cjournal.cz/index.php?hid=clanek&bid=aktualni&cid=490&cp=</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.7441/joc.2023.02.09" target="_blank" >10.7441/joc.2023.02.09</a>

Jazyk výsledku

angličtina

Název v původním jazyce

The cost of equity of Ukrainian food processing companies as a measure of competitiveness

Popis výsledku v původním jazyce

Each company carries out its activities with different financial resources. Their use then affects the cost of equity and profitability of investments, which determines the possibility to compete in the capital market. Thus, this study is provided in order to define the financing policy with a proper capital structure that is able to minimize the cost of equity of the company in order to improve its financial competitiveness. The research focuses on Ukrainian food processing companies in the period 2013-2020. The cost of equity is calculated using the modified CAPM model and the methodology of Aswath Damoradan. The US Treasury bond rate as the risk-free rate, equity risk premium, and unlevered β-coefficient for food processing companies in emerging markets were taken from his databases. The leveraged β-coefficient was determined, considering the interest-bearing liabilities and the trade payable of the companies analysed. The cost of equity and its weighted cost were calculated within variants of the conservative, moderate, and aggressive financing policies. The results indicate that the lowest cost of equity occurs in the variants of conservative, moderate, and super-aggressive financing policies based on the financial independence of the company. Conversely, the lowest weighted cost of equity is identified for the aggressive and super-aggressive financing policies with negligible equity but significant use of non-interestbearing debt. The link between the cost of equity (its weighted cost) and the use of debt is rather weak in the sample of firms examined. Although the relation is direct for the cost of equity, the correlation coefficients show an inverse relationship for its weighted cost. This confirms that the choice of an appropriate variant of financing policy can lead to minimising the cost of equity and increasing the financial competitiveness of the firm.

Název v anglickém jazyce

The cost of equity of Ukrainian food processing companies as a measure of competitiveness

Popis výsledku anglicky

Each company carries out its activities with different financial resources. Their use then affects the cost of equity and profitability of investments, which determines the possibility to compete in the capital market. Thus, this study is provided in order to define the financing policy with a proper capital structure that is able to minimize the cost of equity of the company in order to improve its financial competitiveness. The research focuses on Ukrainian food processing companies in the period 2013-2020. The cost of equity is calculated using the modified CAPM model and the methodology of Aswath Damoradan. The US Treasury bond rate as the risk-free rate, equity risk premium, and unlevered β-coefficient for food processing companies in emerging markets were taken from his databases. The leveraged β-coefficient was determined, considering the interest-bearing liabilities and the trade payable of the companies analysed. The cost of equity and its weighted cost were calculated within variants of the conservative, moderate, and aggressive financing policies. The results indicate that the lowest cost of equity occurs in the variants of conservative, moderate, and super-aggressive financing policies based on the financial independence of the company. Conversely, the lowest weighted cost of equity is identified for the aggressive and super-aggressive financing policies with negligible equity but significant use of non-interestbearing debt. The link between the cost of equity (its weighted cost) and the use of debt is rather weak in the sample of firms examined. Although the relation is direct for the cost of equity, the correlation coefficients show an inverse relationship for its weighted cost. This confirms that the choice of an appropriate variant of financing policy can lead to minimising the cost of equity and increasing the financial competitiveness of the firm.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50206 - Finance

Projekt

—

Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2023

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Journal of Competitiveness

ISSN

1804-171X

e-ISSN

—

Svazek periodika

15

Číslo periodika v rámci svazku

2

Stát vydavatele periodika

CZ - Česká republika

Počet stran výsledku

21

Strana od-do

167-187

Kód UT WoS článku

001024247200010

EID výsledku v databázi Scopus

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