Vol 16, No 2 (2022)

This paper presents the results of analysis of the role of foreign investors in capital structure choice. The analysis is conducted using regression analysis of panel data. Operating with data of 809 companies listed in the South Korean market in 1997-2020, we demonstrate that the debt-to-equity ratio of companies with foreign investors is lower than in the rest of the
firms. In this case, foreign investors’ monitoring of a company’s performance can be a substitute for debt financing as a disciplining mechanism for management. Foreign investors also indirectly affect the capital structure by impacting the speed of adjustment to the target leverage. The results of our study show that the speed of adjustment to the target debt-to-equity ratio increases along with a rise in foreign investor participation. The results are most pronounced for over-leveraged firms. Whereas during financial crises, we observe no effect of the presence of foreign investors on the changes in the target debt-to-equity ratio, we find a significant increase in the speed of adjustment to the target leverage in companies with
foreign investors. During the current coronavirus crisis, corporate debt of companies with foreign investors is decreasing even more, while the speed of adjustment decreases. We attribute these effects to the non-financial nature of the crisis, which makes the role of foreign investors in monitoring management less meaningful. In practice, results can be used by
company managers when facing crises or other macroeconomic shocks. The results obtained can also be used by public authorities in shaping policies to stimulate foreign investment.

This paper aims to discover portfolio allocation strategies that facilitate a bank’s stability. The paper examines the phenomenon of massive failures of Russian banks in the period from 2013 to 2019, in order to identify which of the banks’ strategic decisions regarding assets and liabilities, as well as portfolio structure, lead to higher stability. The dataset contains financial indicators and prudential ratios of 895 commercial banks operating in Russia during that period. 507 banks, or 57% of all banks, lost their license during the considered period. Cases of bank failures were classified depending on whether the Central Bank identified any illegal activities conducted by the failed bank. The high failure rate provides an opportunity to study the differences between failed and non-failed banks in order to determine the factors associated with lower
failure probability. Following the approach applied in most of the previous studies, we use a logistic regression to model the effect of different asset and liability portfolio structure on the failure probability. The hypothesis that failure probability of a bank is affected by its strategic focus of forming an assets and liabilities portfolio was statistically confirmed. We found that the focus of a bank’s activity on providing loans to individuals and attracting deposits from companies leads to lower failure probability, confirming the results of previous studies. Also, we found that more active cooperation with other banks in terms of both borrowing and lending is associated with lower failure probability. Furthermore, we found that banks are less likely to borrow from or lend money to their fellow banks that later fail with illegal activity accusations.
Finally, we found that unlike the EU banks, Russian banks with higher profitability ratios are more stable. The results are relevant for industry practitioners in facilitating the development of a more resilient bank strategy, as well as for regulators for incorporation in early warning models.

The purpose of this study is to assess the effectiveness of export and import activities of domestic companies with foreign direct investment during the external shocks. The relevance of the research is due to the fact that the impact of side effects of FDI on domestic companies and economic uncertainty after the sanctions and the outbreak of the pandemic was ambiguous. The empirical base contains about 170,000 observations on 18,799 operating companies with a foreign capital share of at least 10% for the period from 2012 to 2020, obtained from the Ruslana database - Bureau Van Dijk. For the purposes of the study, the companies are grouped by the industry and their roles in international trade. Efficiency assessment is measured by using the data envelopment analysis (DEA), taking into account the spillover effects from foreign direct investment. The results of the study confirm that firms that trade in both directions have better performance. Next come companies focused only on export or import. Companies that are not involved in international trade are the least efficient (hypothesis 1). Industries that benefit from FDI inflows include more capital-intensive sectors (hypothesis 2). External shocks have a negative impact on the efficiency of companies with FDI (hypothesis 3). This understanding has important implications for long-term economic growth and the recovery of the Russian economy in the current external shocks.

For our research we chose Chinese GVC as representative data for global venture capital and studied the influence of the Chinese government on enterprise innovations through venture capital institutions against the background of the country’s economic and social environment in 2016–2022.
In this paper, we apply regression analysis methods, aiming to study the impact of official venture capital data on the indicators of enterprises’ innovation success and to solve the existing problems in related fields. Regression analysis shows that GVC is a significant driver of innovation and has a certain attractive impact on non-GVC. The study demonstrated that direct venture investment has a greater stimulating influence on corporate innovation than the state’s implicit price subsidies. Topic studies showed that characteristic features of GVC were aligned with the China’s China’s macroeconomic development strategy in the investment field and that GVC was region-oriented.