Development of Methods of Evaluating Companies Taking Into Account Regional Risk Factors

DOI

10.2991/cssdre-19.2019.64How to use a DOI?

Keywords

enterprise value management, risk valuation, investment attractiveness of the region, regional risk, cumulative discount rate.

Abstract

A variety of goals, participants, objectives of an evaluation activity determines the ongoing development of methods and approaches to business valuation. At the same time, there are specific advantages and disadvantages for each method and approach to valuation activity. The disadvantage of the income approach is the subjectivity of the quantitative evaluation of qualitative components of the cumulative discount rate, which significantly affects the possibility of scientific substantiation of the results. In addition, it was revealed that due to the differentiation of the level of economic development and investment attractiveness of regions of the Russian Federation, it is necessary to consider not only internal factors (related to the results of financial and economic activities of the enterprise), but also external ones (related to regional business conditions). The authors developed a quantitative model of determining qualitative indicators of risks inherent in the enterprise in order to improve the methodology for assessing rates of return, which form a cumulative discount rate and meet the requirements of conducting valuation activities, such as the need for quantitative calculation of all characteristics, regardless of the fact how easily they can be accurately measured. As a result of the establishment of a correlation dependence of the indicators of financial and economic activity of a business, regional risks and relevant rates of return, the authors proposed a method that allows to obtain a scientifically-based conclusion about the current value of an enterprise operating in a specific region and not having shares listed on the stock exchange. The developed methodology for estimating the value of regional companies will make it possible to single out the most significant factors adversely affecting the dynamics of business value and the formation of the region's investment attractiveness.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Irina Anikina
AU  - Vyacheslav Rogov
AU  - Maksim Pridachuk
PY  - 2019/06
DA  - 2019/06
TI  - Development of Methods of Evaluating Companies Taking Into Account Regional Risk Factors
BT  - Proceedings of the Volgograd State University International Scientific Conference "Competitive, Sustainable and Safe Development of the Regional Economy" (CSSDRE 2019)
PB  - Atlantis Press
SP  - 323
EP  - 329
SN  - 2352-5428
UR  - https://doi.org/10.2991/cssdre-19.2019.64
DO  - 10.2991/cssdre-19.2019.64
ID  - Anikina2019/06
ER  -