 Modern Corporate Finance, Investments and Taxation: Monograpf /Р. Brusov, Т. Filatova, N. Orekhova, M. Eskindarov.-Springer, 2015 .— 368 p. ISBN 978-3-319-14731-4
This book describes in detail the modem theory of corporate finance, investment, and taxation, created by Brusov, Filatova, and Orekhova (BFO theory), which has replaced the famous theory of capital cost and capital structure by Nobel laureates Modigliani and Miller. The authors have moved from the assumption of Modigliani-Miller concerning the perpetuity (infinite time of life) of companies and further elaborated quantitative theory of valuation of key parameters of financial activities of companies with arbitrary time of life (of arbitrary age).Results of modem BFO theory turn out to be quite different from those of Modigliani-Miller theory. They show that the latter, via its perpetuity, underestimates the assessment of weighted average cost of capital, WACC, and the equity cost of the company and substantially overestimates the assessment of the capitalization of the company. Such an incorrect assessment of key performance indicators of financial activities of companies has led to an underestimation of risks involved, and impossibility, or serious difficulties in adequate managerial decision-making, which was one of the implicit reasons of global financial crisis in 2008.
Established BFO theory allows us conduct a valid assessment of the core parameters of financial activities of companies, such as weighted average cost of capital, equity capital cost of the company, and company's capitalization. It allows the management of a company to make adequate decisions, which improves the effectiveness of the company management. More generally, the introduction of the into the systems of financial reporting (IFRS, GAAP, etc.) would lead to a lower risk of global financial crisis.
The second part of this book is devoted to the assessment of effectiveness of investment projects created by the authors within the modem investment models. The determination of the optimal leverage level for investments is studied in this book from two points of view: from the point of view of owners of equity capital, as well as from the point of view of owners of both equity and debt capital. Соrpогаtе management in the modern world is the management of financial flows. The proposed Brusov-Filatova-Orekhova theory allows to correctly identify discount rates—basic parameters for discounting of financial flows to arbitrary time moment, compare financial flows with a view to adopt literate managerial decisions. The discount rate is a key link to the existing financial system, on which the modern finance can be adequately built, and this proposed book can be of substantial assistance.
This book is intended for students, postgraduate students, teachers of economic and financial institutions, students of MBA program, scientists, financial analysts, financial directors of company, managers of insurance companies and rating agencies, officials of regional and federal ministries and departments, and ministers responsible for economic and financial management.
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