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Published since 2002
Frequency: 4 issues per year
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Issue 1, 2009

Volkov D. L., Nikulin Ye. D. Operating Efficiency and the Companys Fundamental Value of Equity

The current paper presents the results of analysis of influence of short-term operating efficiency of a company measured by the indicator of return on assets on the fundamental value of equity. The empirical study was conducted on the base of accounting data on 62 Russian public companies for four years from 2003 to 2006. The article analyzes modifications of the indicators of return on assets and residual operating income and constructs the models of valuation based on different approaches to definition of firms assets. The results of the study let us accept the hypothesis about the existence of statistically significant positive relation between short-term operating efficiency and fundamental value of equity for the companies belonging to production industries and reject the same hypothesis for the companies of service industries. The article also considers the explanatory power of models of valuation and makes the conclusion about the existence of larger results robustness in the case of models based on the indicator of return on net operating assets. Keywords: Fundamental Value of Equity, Return on Assets, Residual Operating Income

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Released: Issue 2, 2017
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