The Concept of Managing the Value of IT-corporations: Industry Specifics and Current Trends

The Concept of Managing the Value of IT-corporations: Industry Specifics and Current Trends

DOI: 10.34130/2070-4992-2021-1-4-483

Full article (in Russian )

Shvetsova I. N. — PhD in Economics, Associate Professor, Associate Professor of the Department of Financial Management of the Institute of Economics and Management, Federal State Budgetary Educational Institution of Higher Education «Pitirim Sorokin Syktyvkar State University», Syktyvkar, Russia, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Kleus V. O. — Expert of the Scientific laboratory of Investment Design, Federal State Budgetary Educational Institution of Higher Education «Pitirim Sorokin Syktyvkar State University», Syktyvkar, Russia; Specialist, Federal Treasury Department for the Komi Republic, Syktyvkar, Russia, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The purpose of the presented research is to theoretically substantiate the concept of value based management of IT-corporations, taking into account industry specifics and current trends in accelerated digitalization. The research meth-odology is based on a comparative analysis of modern theories of valuation and value based management of public corpo-rations, as well as data analysis of financial activities of two leading IT corporations in Russia. As a result of the research approaches and methods of corporate valuation are systematized, the features of business valuation in the value man-agement system are highlighted; a comparative analysis of models for estimating the value of IT-corporations has been carried out. It is proposed to use the approach of identifying the concepts of market capitalization and the value of public corporations in the practice of valuation activities, which allows us to consider the value (value) of a corporation as a function of dependence on cost multipliers and, above all, profitability indicators. As a result of the use of econometric tools, a four-factor model of the dependence of the market capitalization (value) of selected IT-corporations on profitabil-ity multipliers is constructed. It is established that revenue per share, P/E multiplier, Net profit per share have a direct strong impact on market capitalization. The positive impact of ROE on the market capitalization of IT-corporations has not been proven. Evaluation of the quality of the model and the degree of dependence makes it possible to justify the inclusion of the above financial indicators in the system of balanced indicators as a key element of the value based manage-ment system. We believe that most of the financial management tasks can be implemented within the framework of the econometric value model and the value management system proposed in the article, however, the improvement of the valuation model of IT-corporations for the purposes of effective management continues to be the subject of further scien-tific research. The directions of future research should be the study of the corporate structure of IT-corporations and tak-ing into account the new business model format in the value management system, as well as the development of ap-proaches and metrics to assess the impact of following the ESG agenda on the value of the corporation.

Keywords: corporation, IT industry, corporation value, corporation value management, balanced scorecard, PAS model.

References

1. Abroskin A. S., Zaitsev Yu. K., Idrisov, G.I. et al. E`konomicheskoe razvitie v cifrovuyu e`poxu [Economic development in the digital age]. Moscow: Publishing House "Delo" RANEPA, 2019. p. 5. (In Russ.)

2. Weaver S. C., 2012. The Essentials of financial analysis. Mc Graw Hill. 11 p.

3. Kokins G. Upravlenie rezul`tativnost`yu: Kak preodolet` razry`v mezhdu ob``yavlennoj strategiej i real`ny`mi processami [Performance Management: How to bridge the gap between the announced strategy and real processes]. Moscow: Intellectual Literature, 2021, pp. 258—259. (In Russ.)

4. Damodaran A. Investicionnaya ocenka: Instrumenty` i metody` ocenki lyuby`x aktivov [Investment valuation: Tools and methods for evaluating any assets]. Moscow: Alpina Business Books, 2005. 1341 p. (In Russ.)

5. Stewart G. B., 1991. The quest for value: a guide for senior managers. III, 800 p.

6. Copeland T., Koller T., Murrin J., 2000. Valuation: measuring and managing the value of companies. JOHN WILEY & SONS, INC., 862 p.

7. Teplova T. V. Industry-specific features of the choice of indicators for evaluating the effectiveness of activities in general and the contribution of financial decisions. Audit i finansovy`j analiz [Audit and financial analysis], 2006, no 3, pp. 84—91.

8. Nazarova V. V., Ilyina M. E. Valuation of companies in the information technology sector (IT sector). Naukovedenie [Science studies], 2014, no. 3, pp. 1—25. (In Russ.)

9. Chernenko V. A., Bocharov V. V. Upravlenie stoimost`yu biznesa: ucheb [Business value management: study]. St. Pe-tersburg: Nestor-History, 2016. 160 p. (In Russ.)

10. Novak M. A. Valuation of a company as one of the indicators of the effectiveness of its activities. Innovacionnaya e`konomika: Perspektivy` razvitiya i sovershenstvovaniya [Innovative economy: Prospects for development and improvement], 2018, no 7, pp. 61—67. (In Russ.)

11. Lobeev I., 2021. Bankruptcy Prediction for Innovative Companies. Corporate Finance, no 15, pp. 36—55.

12. Schwartz E. S., Moon M., 2000. Rational Pricing of Internet Companies. Financial Analysts Journal, 56(3), pp. 62—75.

13. Sullivan P. H. Jr., Sullivan P. H. Sr., 2000. Valuing intangibles companies. An intellectual capital approach. Journal of Intellectual Capital, vol. 1, no. 4, pp. 328—340.

14. Roos J., Roos G., Edvinsson L., Dragonnetti L., 1997. Intellectual Capital. Navigating in the New Business Landscape, Macmillan, 1997. 145 p.

15. Hitchner D. R. Tri podxoda k ocenke stoimosti biznesa: monografiya [Three approaches to business valuation: a mon-ograph]. Moscow: Publishing House Maroseyka, 2008. 307 p. (In Russ.)

16. Hsu J. C., Schwartz E. S., 2003. A Model of R&D Valuation and the Design of Research Incentives. NBER Working Pa-per. No. 10041. October. JEL No. G31, O32.

17. Ivanov I. I., Baranov V. V. Finansovy`j menedzhment: stoimostnoj podxod [Financial management: a cost approach]. Moscow: Alpina Business Books, 2008, pp. 297—326. (In Russ.)

18. Kartskhiya A. A. Digital corporations in a new quality of management. Grazhdanskoe pravo [Civil law], 2020, no. 4, pp. 22—26. (In Russ.)

For citation: Shvetsova I. N., Kleus V. O. The concept of managing the value of IT-corporations: industry specifics and current trends. Corporate Governance and Innovative Economic Development of the North: Bulletin of the Research Center of Corporate Law, Management and Venture Investment of Syktyvkar State University, 2021, vol. 1, issue 4. Р. 483—495. DOI: 10.34130/2070-4992-2021-1-4-483 (In Russian).