Special Issue on the Banking System and Financial Markets of Russia and other Countries: Problems and Prospects

Editoria

Editorial

Editoria

BFO Theory with Variable Profit in Case of Advance Payments of Tax on Profit

The Brusov–Filatova–Orekhova (BFO) theory is generalized for the simultaneous account of variable company profit and advance tax on income payments. The generalized BFO formula for the WACC, has been derived. The dependence of WACC, discount rate, WACC–g (here g is growth rate), company capitalization, V, the equity cost, ke, on leverage L at various values of g, on debt cost, kd, and on age of the company, n, is studied. It is shown, that WACC, is no longer a discount rate. This role passes to WACC–g, which decreases with g, while the company's value increases with g. The tilt of curve k(L) growths with g. It is found that at the growth rate g < g* the tilt of the curve ke(L) is negative. This changes significantly the company's dividend policy principles. WACC(L) as well as the discount rate, WACC–g, decrease with the increase of debt cost kd. V (L) at all values of kd increases with leverage L, as well V(L) increases with kd. This means that tax shield advantages the decrease of the cost of raising capital. Examining the main financial parameters of the company at the positive (g=0.2) and negative (g=–0.2) growth rates, we found a huge difference in their behavior. This allows you to explore companies with growing profits and companies with decreasing profits, as well investigate the financial state of the companies whose profits rise and fall in different periods

Inflation in Brusov–Filatova–Orekhova Theory and in its Perpetuity Limit – Modigliani – Miller Theory

In this paper the influence of inflation on capital cost and capitalization of the company within modern theory of capital cost and capital structure – Brusov–Filatova–Orekhova theory (BFO theory) (Brusov et al. 2011, 2013; Filatova et al., 2008) and within its perpetuity limit – Modigliani – Miller theory is investigated. By direct incorporation of inflation into both theories, it is shown for the first time that inflation not only increases the equity cost and the weighted average cost of capital, but as well it changes their dependence on leverage. In particular, it increases growing rate of equity cost with leverage. Capitalization of the company is decreased under accounting of inflation

Path Integral Two Dimensional Models of P– and D–Wave Superconductors and Collective Modes

The main parameter, which describes superfluids and superconductors and all their main properties is the order parameter. After discovery the high temperature superconductors (HTSC) and heavy fermion superconductors (HFSC) the unconventional pairing in different superconductors is studied very intensively. The main problem here is the type of pairing: singlet or triplet, orbital moment of Cooper pair value L, symmetry of the order parameter etc. Recent experiments in Sr2RuO4 renewed interest in the problem of the symmetry of the order parameters of the HTSC. The existence of CuO2 planes – the common structural factor of HTSC – suggests we consider two-dimensional (2D) models. A 2D– model of p–pairing using a path integration technique has been developed by Brusov and Popov. A 2D model of d–pairing within the same technique has been developed by Brusov et al. All properties of 2D–superconductors (for example, of CuO2 planes of HTSC) and, in particular, the collective excitations spectrum, are determined by these functionals. We consider all superconducting states, arising in symmetry classification of p-wave and d-wave 2D–superconductors, and calculate the full collective modes spectrum for each of these states. This will help to identify the type of pairing and the symmetry of the order parameter in HTSC and HFSC

Hidden Global Causes of the Global Financial Crisis

Abstract: Hopes of ending the financial crisis did not materialize. Recent events (the problems of the euro zone, the threat of default in the U.S., the collapse of the financial market after a reduction of the credit rating of the U.S., debt problems in the world (Europe, U.S.), U.S. fiscal cliff, etc.) show that the crisis deepened, affecting new areas and taking on a systemic character. It becomes clear that we need in-depth analysis of its general, systemic causes. This article examines recent results in this field, obtained by scientists of Finance University under the Russian Federation Government

The Golden Age of the Company: (Three Colors of Company's Time)

In this paper we investigate the dependence of attracting capital cost on the time of life of company n at various leverage levels, at various values of capital costs with the aim of define of minimum cost of attracting capital. All calculations have been done within modern theory of capital cost and capital structure by Brusov - Filatova - Orekhova (Brusov et al. 2011a,b,c,d,e; 2012 a,b; 2013 a,b,c; 2014 a,b; Filatova et al. 2008). It is shown for the first time that valuation of WACC in the Modigliani - Miller theory (Modigliani et al. 1958; 1963; 1966) is not minimal and valuation of the company capitalization is not maximal, as all financiers supposed up to now: at some age of the company its WACC value turns out to be lower, than in Modigliani - Miller theory and company capitalization V turns out to be greater, than V in Modigliani - Miller theory. It is shown that, from the point of view of cost of attracting capital there are two types of dependences of weighted average cost of capital, WACC, on the time of life of company n: monotonic descending with n and descending with passage through minimum, followed by a limited growth. The first type takes place for the companies with low capital costs of the company, characteristic for the western companies. The second type takes place for higher capital costs of the company, characteristic for the Russian companies as well as for companies from other developing countries. This means that latter companies, in contrast to the western ones, can take advantage of the benefits, given at a certain stage of development of company by discovered effect. Moreover, since the "golden age" of company depends on the company's capital costs, by controlling them (for example, by modifying the value of dividend payments, that reflect the equity cost), company may extend the "golden age" of the company, when the cost to attract capital becomes a minimal (less than perpetuity limit), and capitalization of companies becomes maximal (above than perpetuity assessment) up to a specified time interval. Concluded that existed up to the present conclusions of the results of the theory of Modigliani-Miller (Modigliani et al. 1958; 1963; 1966) in these aspects are incorrect. We discuss the use of opened effects in developing economics (Brusov et al. 2015)

New Meaningful Effects in Modern Capital Structure Theory

Paper is devoted to describe the new meaningful effects in capital structure theory, discovered within modern theory of capital cost and capital structure, created by Brusov, Filatova and Orekhova (BFO theory). These qualitatively new effects are present in general version of BFO theory and absent in its perpetuity limit (Modigliani - Miller theory). BFO theory has changed some main existing principles of financial management. Discovered effects modify our understanding of financial management and dictate some unusual managerial decisions