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CFC members presented the research "The relationship between dividend and financing decisions (following the example of companies on the emerging capital markets)" at the regular Research Workshop of the HSE Finance Department

Nikita Pirogov and Artem Anilov, members of Corporate Finance Center, presented their report  'The relationship between dividend and financing decisions (following the example of companies on the emerging capital markets)' at the regular Research Workshop of the HSE Finance Department 'Empirical Corporate Finance' on September 14th, 2015. 


Presenters:

Nikita Pirogov, Senior Lecturer, Faculty of Economic Sciences, Department of Science

Artem Anilov, Masters' program "Strategic Corporate Finance" alumni


ABSTRACT:
We address the issue of differences in firm performance depending on the pattern of diversification strategy. We analyze differences in firm performance, as well as the form of dependence between the level of diversification and performance depending on the pattern of diversification through organic or inorganic growth.

On the sample of 861 companies with 253 companies representing emerging capital markets and 608 companies from developed capital markets for the period of 2009-2012 we show that in developed capital markets corporate diversification through organic growth creates value in the short-term and long-term run while diversification through inorganic growth creates value only in the short-term period. We also prove that in emerging capital markets diversification through organic growth destroys value in the short-term period but results in value creation for the inorganic pattern of diversification in the short-term and long-term run.