The influence of equity structure internationalisation on the value of companies: The case study of Russian Stock Market

Abstract

The study employs value-based management theory as a tool of resolving agency conflicts and investigates how it functions in the context of different ownership structure. The goal of the research is to explore the relationship between market and fundamental value of company and the influence of internationalization of ownership structure on the pattern of this relationship. The research deals with two main issues: identifies the valuation model with the highest capability to resolve agency conflict in the context of Russian stock market and reveals reasons for differences in market values of companies with foreign ownership and without. As one of the results of the study there are provided recommendations for practitioners, what model of valuation to choose for the basis of incentive system for management. Also study proves better alignment of interests between shareholders and managers in companies with foreign ownership and reveals the fact of undervaluation of such companies in comparison with companies without foreign ownership.