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  • ­­­System of corporate financial decisions of innovative companies: empirical analysis of  developed and emerging capital markets

­­­System of corporate financial decisions of innovative companies: empirical analysis of  developed and emerging capital markets

Priority areas of development: economics
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of research

The goal of the project – to determine the specifics of financial decisions of innovative companies (KIF) in choosing the capital structure, strategic investments in the acquisition of other companies, decisions on the development of corporate financial architecture using the data of developed capital markets and the largest emerging capital markets (BRICS group). The research is done on large companies from emerging capital markets of the BRICS group (Brazil, Russia, India, China and South Africa) as well as Western European and US developed capital markets. In addition to that, large companies from rapidly developing countries (South Korea, Singapore, Malaysia, India and South Africa) have been taken for the research. The areas of the research are corporate financial decisions concerning the choice of financing policy, the policies of corporate financial architecture, transactions of strategic purchase of a corporate control. Corporate solutions are considered in terms of their motives and impact on the effectiveness of innovative companies.


  • regression analyses of cross-section and panel data;
  • correlation analyses;
  • non-linear modeling;
  • regression analyses with the help of logit and probit models;
  • cluster analyses;
  • method of events (event study analyses);
  • neural networks.

We also employ instrumental variables and systems of equations to deal with endogeneity and specific tests for robustness check.

Empirical base of research

The data was collected from BRICS and Western Europe companies, as well as large companies from developed capital markets (USA, Japan) and companies from rapidly developing countries (South Korea, Taiwan).  We use such resources of information as information agency Bloomberg, Thompson Reuters Eikon, Capital IQ, Compustat, Bureau Van Dijk analytical agency, SPARK-Interfax information system, as well as sites of the companies, sites of FSFM, national stock exchanges, and resources of the World Bank.

Results of research

Sub-project “Financing Policy of Companies”

  • The study conducted on the data of 418 high and low-tech US companies for the period of 2001-2016 (from the Russell 1000 index) showed that the amount of money in innovative companies is significantly higher than in companies from other industries. At the same time, we have found that one of the main reasons for storing large amount of funds by high-tech companies is connected with the financial flexibility, while for companies in other industries, the choice of the amount of stored money depends largely on the macroeconomic situation (the rate of economic growth and the level of interest rates).
  • During the pilot experiment on the sample of innovative and non-innovative companies from developing capital markets of 11 countries for 2010-2016, it was found out that the concentration of ownership by the insider contributes to the choice of the company's policy to get rid of debt financing capital. On the other hand, indicators of the corporate governance quality do not have a significant impact on the decision making.  Thus, conservatism in the financing policy of companies can be determined not only by corporate financial characteristics, but also by the specifics of the ownership structure and corporate governance.
  • In studies of the impact of taxation on the capital structure of pharmaceutical companies in developed countries, the positive impact of the state tax rate on the financial leverage of companies has been proved. Considering the availability of special tax benefits (tax credit, tax deduction, reduction of tax deductions) for pharmaceutical companies, it was revealed that there is a negative impact on the capital structure of the company. This means that pharmaceutical companies are trying to decrease the level of debt financing by reducing taxable profits and freeing up additional own resources.
  • A sample of 154 large pharmaceutical companies revealed that the costs of financial instability do not depend on tangible and intangible assets, R&D costs and the availability of patents by the company. At the same time, it was found out that there is a significant impact on the change in costs of financial instability of growth rate of the company's debt, the growth rate of market capitalization and the period until the end of the patent. Thus, the cost of financial instability increases depending on the shrinkage of patents’ provision duration for pharmaceutical companies.
  • Global and regional models of bankruptcy of innovative and non-innovative companies were built on the sample of 1240 companies. After analyzing different models, it was revealed that the most accurate model in predicting the bankruptcy of innovative companies is the global model based on the data for the entire sample. Therefore, the constructed global model is able to give correct forecasts for any of the regions represented in the research (North America, Asia and Europe). The main factors affecting the probability of bankruptcy were found to be the indicators of innovation activity as well as R&D costs increase in case of high level of financial instability.

Sub-project “Efficiency of Mergers and Other Strategic Transactions”

  • On the example of 110 mergers and acquisitions  transactions of high-tech companies from  European countries for the period 2010-2016,  included in the top 25 of the global Innovation Index (UK, France, Ireland, Germany, Norway, Switzerland, Finland, Luxembourg, Belgium, Denmark, Sweden and the Netherlands), we were able to empirically show that the level of the accumulated knowledge of the target company, which also indicates its innovative potential, has a negative impact on the accumulated excess profitability of the buyer company. The efficiency of M&A of high-tech companies is negatively affected by the cost of R&D in the country of the buyer company and the level of innovative development of the target country. Analysis of the determinants of M&A performance of high-tech companies also showed that the profitability of the buyer company positively depends on the number of researchers engaged in R&D in the country of the buyer company.
  • A sample of 937 high-tech companies from the United States, which made 2796 mergers and acquisitions transactions for the period from January 1, 2009 to January 1, 2018, proved that companies from the high-tech sector in the United States achieve the highest levels of strategic and operational efficiency using a mixed growth strategy. In other words, there is a nonlinear (parabolic) relationship between operational efficiency, strategic efficiency that considers investors' expectations, strategic efficiency that takes into account the fundamental value and the propensity of companies to organic or inorganic growth strategies. The study also revealed that larger companies are more likely to develop through an inorganic growth strategy due to the fact that smaller companies have a limited resource base that restricts the use of an inorganic growth strategy.

Sub-project "Financial Architecture”

  • A sample of 84 public companies from Russia and 100 UK pubic companies analyzed from 2010 to 2015 with the use of cluster analysis revealed that the industry does not affect the financial architecture of companies, and the financial architecture has a significant impact on the operation of the company (this result is got by the use of the created structure that helps to evaluate not only the individual characteristics, but also all aspects of their interactions in general).
  • A study on a sample of US companies (12565 observations for the period from 2004 to 2015) revealed that gray investors reduce the value of the company, while passive independent and strategic institutional investors improve business performance (according to Tobin q and ROA indicators), which is associated with their active participation in the monitoring of the company's activities and long-term planning in the implementation of investments.
  • A sample of 416 Russian startups (207 from the space cluster and 209 from the nuclear cluster) revealed that the presence of state-affiliated enterprises among the owners has a negative impact on ROA and net profit margin, which can be explained by a longer planning horizon or the establishment of restrictions on the development of any projects or the process attracting other investors.  The presence of venture capital has a positive effect on the performance indicators selected for the study, and this effect is more vivid for the cluster of the space sphere. The interesting fact is connected with the lack of significant influence of family ownership in the space industry in Russia, meanwhile the ownership of managers has a positive impact.
  • Based on the analysis of panel data, which includes the managerial and financial characteristics of 102 companies from the S&P 500 rating from 1999 to 2017, it was found that the position of the company's founder as a chief executive officer and the interest of the chief executive director, expressed in the ownership of the company's shares (which is often used by the authors as a definition of "familiarity" of the company), have a positive impact on investment in development, which can be explained by the specifics of these industries (high competition, constant need for innovation and awareness of the need for investment as a primary measure to preserve the business). The conclusions about the positive impact of family participation (joint ownership >5% and participation in corporate governance) on the innovation process, expressed in income margin, and the negative consequences of the dual role of the executive director, correspond to the prevailing theory at the moment and complement it in terms of the sample, which includes innovative companies.
  • A sample of 1335 (486 innovative and 849 non-innovative) public companies from US, analyzed according to the data for year 2015 using cluster analysis, revealed that there are seven steady clusters of financial architecture among innovative companies. Patterns of financial architecture of innovative companies differ from non-innovative and there are four independent patterns ("owner-manager", "startups", "dependent board of directors", “insider ownership”), presented only among innovative companies. In addition to that industry affiliation does not affect the financial architecture of companies. It is also revealed that innovative companies are characterized by a more active presence of institutional investors among shareholders; the presence of a duality factor of the CEO functions and the Chairman of the Board of Directors significantly affects the formation of patterns only among innovative companies and innovative companies are characterized by a higher Tobin q coefficient, while non-innovative companies have a higher ROA ratio.

Level of implementation,  recommendations on implementation or outcomes of the implementation of the results

 In 2018, the results are presented in 14 reports at Russian and international conferences in Moscow, St. Petersburg, Toledo (Spain), Brussels (Belgium), Warsaw (Poland), Reykjavik (Iceland), Amsterdam (Netherlands). The research results are presented in ten papers: five articles (published and accepted for publication) in domestic and foreign scientific journals, three articles have been preprinted for the HSE series and two collective monographs have also been prepared. The list of published and accepted for printing research works is presented in Appendix A. Currently, there are three preprints (“Do Boards of Directors Affect CEO Behavior? Evidence from Payout Decisions”, “The anchoring effect in mergers and acquisitions: evidence from an emerging market” and “The influence of the ownership structure on the performance of innovative companies in the US”) and the monograph “Strategic financial decisions of companies in emerging capital markets” have been published. The monograph “Mergers and acquisitions in emerging capital markets: performance and success factors” for the international series at Springer publishing office “Advanced Studies in Emerging Markets Finance” has been submitted to the publisher. Chapters will be indexed in WoS. The obtained results are also presented in several reports at the research seminar of the School of Finance of the Faculty of Economic Sciences of the HSE “Empirical Studies of Corporate Finance”.

Application area

Thanks to the theoretical results obtained during researches, it gave an opportunity to improve the educational process of the School of Finance at HSE through the implementation of the following activities: (1) materials developed in the framework of project implementation are included in advanced lecture courses of  Corporate Finance-2, Strategic Finances of Companies and Behavioral Finance taught in the master's program "Strategic financial management of the company"; (2) research models developed in the process of implementing NLU projects were used in the course of the scientific master's seminar "Empirical Corporate Finance" in the framework of the master's program "Strategic Financial Management of the Firm." A myriad of results from the researches were used in lecture courses taught at the Higher School of Management of HSE in the Executive MBA Doctor of Business Administration programs for the top management of Russian companies. Moreover, the results are used for developing a package of new intensive programs in finance for business within the School of Finance of the Faculty of Economic Sciences of NRU HSE.

Economic significance

A large portion of the results can be used in the real life management of innovative companies: the results of the project on financing policy regarding the role of tax factors can be used to justify the borrowing policy, conclusions about the specifics of companies with zero debt are significant for the policy of rejecting debt financing for innovative companies, the results of a study analyzing mergers and acquisitions can be used by management and boards of directors to identify key determinants of a value creation in emerging capital markets. Besides that, the revealed dependencies between the intellectual capital of the board of directors, its structure and the efficiency of the work of the largest Russian companies can help to improve the quality of corporate governance.

Significant results were obtained to improve the analytical work in companies providing consulting services. The conclusion is that the results of financial architecture projects are important for improving the quality of consulting services in the field of strategy especially in the Russian market.


Kokoreva M. S., Ivashkovskaya I., Makeeva E. Y. Advances in сapital structure in emerging capital markets / Ed. by I. Ivashkovskaya.; Ed. by I. Ivashkovskaya, M. S. Kokoreva. Springer Publishing Company, 2019.
Stepanova A. N., Malika Shaikhutdinova, Vladislav Savelyev. THE ANCHORING EFFECT IN MERGERS AND ACQUISITIONS: EVIDENCE FROM AN EMERGING MARKET / National Research University Higher School of Economics. Series WP BRP "Basic research program". 2018. No. WP BRP 63/FE/2018.
Kokoreva M. S., Maryna Goncharenko. Motives of high-Tech companies to hold cash // Studies in Economics and Finance. 2019
Makeeva E. Y., Mikhaleva I. TAXATION REGULATION OF THE BRICS’ INNOVATIVE COMPANIES // BRICS Law Journal. 2019. Vol. IV. No. 1. P. 41-62. doi
Ивашковская И. В., Степанова А. Н. Устойчивость роста компании. Взгляд с позиций типов корпоративной финансовой архитектуры // В кн.: Стратегические финансовые решения компаний на развивающихся рынках капитала: монография / Под общ. ред.: И. В. Ивашковская. М. : КноРус, 2019. Гл. 10. С. 258-286.
Grigorieva S., Kuzmina Svetlana. Post-acquisition Value Effects of M&A Deals: A Comparative Analysis in Developed and Emerging Capital Markets, in: Strategic Deals in Emerging Capital Markets. Are There Efficiency Gains for Firms in BRIC Countries? / Ed. by I. Ivashkovskaya, S. Grigorieva, E. Nivorozhkin. Switzerland : Springer, 2020. doi Ch. 5. P. 113-135. doi
Grigorieva S. Corporate Diversification-Performance Puzzle in BRIC, in: Strategic Deals in Emerging Capital Markets. Are There Efficiency Gains for Firms in BRIC Countries? / Ed. by I. Ivashkovskaya, S. Grigorieva, E. Nivorozhkin. Switzerland : Springer, 2020. doi Ch. 9. P. 223-239. doi
Grigorieva S. How M&A Deals Influence Corporate Performance in Developed and Emerging Capital Markets: A Review of Empirical Results in the Literature, in: Strategic Deals in Emerging Capital Markets. Are There Efficiency Gains for Firms in BRIC Countries? / Ed. by I. Ivashkovskaya, S. Grigorieva, E. Nivorozhkin. Switzerland : Springer, 2020. doi Ch. 2. P. 33-61. doi
Kokoreva M. S., ILIASOV D. Financial constraints versus financial flexibility: What drives zero-debt puzzle in emerging markets? // Russian Management Journal. 2018. Vol. 16. No. 3. P. 407-434.
Григорьева С. А., Колмыкова Т. В. Влияние выбора акций как средства платежа на эффективность сделок M&A в условиях информационной асимметрии // Вестник Московского университета. Серия 6: Экономика. 2020. № 3. С. 58-77.
Grigorieva S., Egorova Angelina. The Effect of an Acquirer’s Life Cycle Stage on the Performance of M&As: Evidence from Mega and Non-Mega Deals in the US // Journal of Corporate Finance Research. 2019. Vol. 13. No. 3. P. 7-18. doi