Drivers of Market Capitalization of BRIC's Companies Operating in Extractive Industries

<p>This study investigated the influence of various country, industrial and internal financial factors on the market capitalization of BRIC&#39;s extracting companies during 2007-2013. The aim of the investigation was to establish which factors contribute more to the market capitalization of respective companies: external independent factors, inter alia high price of resource traded (caused by its scarcity and high demand on it) or internal factros that can be governed by the management. It was suggested that the price of resource traded should be the major driver the of the market capitalization of extractive companies and the influence should be positive. Actual results showed that the link between the price of resource and the market cap differs from industry to industry inside the extractive sector. The effectiveness of the production, reflected as ROE, ROA or ROIC, on the contrary, showed positive effect on the market cap in any of he industries involved in the investigation. Positive link between the market cap and country drivers (estimating investment, business and political climate), between capitalization and EBIT; weak negative link with financial leverage and insignificant link with the coverage ratio were also revealed. Generaly, it was proved that a substantial part of the company&#39; value can be controlled by the management through &nbsp;the respective value drivers. Reliance on the high price of resource traded in the question of value maximization has no sence, because not the dinamics of the price, but the source of respective fluctuation influences the market capitalization of extractive companies.</p>