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Empiric studies of corporate financial decisions of companies in Russia and other emerging capital markets


The target of this research is the financial architecture of major companies in the emerging capital markets of BRIC (Brazil, Russia, India and China) countries as an aggregation of structural characteristics of the company. The classic structural characteristics of a company that may work as instruments to influence the efficiency of their operation include, first, ownership and the voting structure forming the foundation of control over a company, secondly, capital structure as a policy instrument for financing the long-term development of a company, and, thirdly, the intra-corporate control structure realized through the mechanism of corporate governance.


  • To determine the key and specific characteristics in forming the financial architecture of Russian companies affecting their efficiency during the period of transition to an innovation economy compared with companies represented in the largest emerging (developing) capital markets (BRIC countries) and European companies;  
  • To carry out an initial analysis of changes in the financial architecture of companies amid the global financial crisis.
  • In the process of the research work, the set tasks were achieved through studying:
  • Determinants and motives of choosing a capital structure;
  • Financing policy that conditions the nature of transition to the target capital structure and its changes during the crisis;
  • Changes in corporate governance and its impact on company efficiency in Russia;
  • Changes in the ownership structure of Russian companies, the impact on company efficiency in Russia, Eastern European and Western European countries;
  • The role of intellectual capital in corporate financial decisions made by Russian companies.

Based on the databases for BRIC and Eastern Europe (EE) companies, formed during the project, we have:

1. built and tested models of determinants affecting the choice of the capital structure of Russian companies compared with companies of other BRIC and EE countries, determined motives for forming capital structure by Russian companies compared with companies from other BRIC and EE countries;

2. built a model of the capital structure movement of BRIC companies to target levels and reproduced a comparative evaluation of the capital structure adaptation rate;

3. built and tested models of key factors of economic profit of major Russian companies, the impact of corporate governance quality on the efficiency of major Russian companies, measured by new indicators – economic profit, the impact of remuneration system on the investment activity of Russian companies;

4. built and tested a model of dependence of Russian company efficiency on changes to the ownership structure, the level of its concentration within shareholders, and presence of management, board of directors members, state, and minority members among shareholders;

5. built and tested models of dependence of company value in BRIC countries based on their intellectual capital and the dependence of decisions on financing of companies in BRIC countries on the efficiency of using their intellectual capital.

Results of the research indicate (1) a dependence of the capital structure of companies in emerging capital markets on factors that are traditional for developed countries (return on equity, size and structure of company’s assets) and absence of meaningful country-specific differences in determinants of capital structure in BRIC and EE countries. (2) The importance of the country-specific factor is demonstrated by the motives for forming a capital structure by companies in emerging markets: the model of capital structure formation in compliance with theory of the order of financing does not apply to Chinese, Indian and Brazilian companies. For Eastern Europe countries, the model explains the lower share of debt than in Russia.

(3) During the process of forming a financing policy, Russian companies try to achieve their target level of capital structure at an adaptation rate of 22%, which means a decline in deviation of the actual level of debt leverage from the target by 22% over one time period versus 23%, 25% and 29% for large companies in Brazil, India and China respectively.

(4) Analysis of capital structure of Russian companies during the financial crisis of 2007-2008 demonstrates that the observed considerable changes in capital structures are mostly caused by external economic factors rather than internal financing policy.

Results of the research show (5) statistically meaningful direct dependence of strategic efficiency of the company, expressed by its economic profit, on the quality of corporate governance, expressed by the Transparency & Disclosure rating from Standard & Poor. (6) We demonstrated the importance of the board of director’s member remuneration (the fixed part of the remuneration) on strategic efficiency of the company, expressed in investment activity. (7) Strategic efficiency of the company is inversely dependent on ownership concentration within shareholders not involved in company management. The research (8) rejected the hypothesis regarding the importance of state ownership on strategic efficiency and (9) rejected the hypothesis regarding changes in the impact of management ownership share on the strategic efficiency of the company with a change in the share.

(10) The project revealed an inverse relationship between the strategic efficiency of the debt leverage and the size of the company and a direct relationship between the growth rate of assets and the ratio of independent directors in the board of director; and (11) discovered the statistically meaningful impact of human, innovation and network components of intellectual capital on the value of large public companies in BRIC countries; (12) the project proved meaningful impact of dividend payout and personnel costs together with such indicators as capex and the size of assets on the value of companies in BRIC countries; (13) the project revealed a direct relationship between company value in BRIC countries with sector specifics (for the hi-tech sector); (14) the project revealed a direct relationship between the share of borrowed financing and the efficiency of process capital use and an inverse relationship between client and innovation capital use in large Russian, Indian and Chinese companies.


Солнцева М. С., Ивашковская И. В. Выбор структуры капитала российскими компаниями: эмпирическое исследование // В кн.: Сборник работ по итогам IX Международной конференции "Модернизация экономики и глобализация" / Науч. ред.: Е. Г. Ясин. [б.и.], 2009. С. 155-163.
Ivashkovskaya I., Kokoreva M. S. Capital Structure Choice in BRIC: Do Russian, Brazilian and Chinese Firms Follow Peckign Order or Trade-Off Logic of Financing?, in: Global Business and Technology Association. Business Strategies and Technological Innovation for Sustainable Development: Creating Global Prosperity for Humanity. Eleventh International Conference Readings Book.. , 2009. P. 572-579.