Analytical decomposition model of the indicator of corporate management quality and effectiveness

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Authors:

O.H.Vagonova, Dr. Sc. (Econ.), Prof., State Higher Educational Institution “National Mining University”, Dnipro, Ukraine, e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

O.M.Vakulchyk, Dr. Sc. (Econ.), Prof., University of Customs and Finance, Dnipro, Ukraine

Ye.V.Protasova, Cand. Sc. (Econ.), Prydniprovs’ka State Academy of Civil Engineering and Architecture, Dnipro, Ukraine

Abstract:

Purpose. The purpose of the article is the grounding and choice of generalizing index which describes the corporate management quality and effectiveness, as well as the development of the analytical model of index decomposition in accordance with stages of capital transformation.

Methodology. The results were obtained by applying the method of scientific generalization to formulate of scientific problems and general conclusions; statistical method to calculate dynamic indexes of basic indicators of mining enterprises’ activities; method of simulation to develop an indicator of corporate management quality and effectiveness; analysis and synthesis were used to construct the analytical decomposition of generalizing index and determine the influence factors.

Findings. Index of quality and efficiency of corporate management was grounded and selected. An analytical model of decomposition of this index considering certain basic economic factors of company operations and dependencies of their dynamics was developed.

The proposed expanded (compared with the “golden rule of economics”) model of the dynamics of basic indicators of activity of the company describes stages of transformation processes taking place at the company – the conversion of an enterprise’s investment (physical) capital into the market capital.

The dynamics of the market value of PJSC “Pivnichnyi GZK”, and the basic economic indicators of its activities during the period from 2007 to 2015 was analyzed. It was determined that only in 2010 the dynamics of indicators corresponded to the model offered for companies with corporate management.

Indicators of the analytical decomposition index of the corporate management quality and efficiency of the PJSC “Pivnichnyi GZK” were analyzed, the dynamics tendencies and influence on the ratio of the market value of the enterprise and the value of assets were determined.

Originality. For the first time, an analytical decomposition model of the quality and the effectiveness of corporate management indicator was proposed, management was calculated as the ratio of the market value of the enterprise to the value of its assets and can be represented as the product of four factors, which consistently describe stages of capital transformation: asset turnover, the share of value added in the income, part of the profit in the value added, ratio of the market value to the enterprise profit.

The “golden rule of economics” has been further developed by additional indicators: the market value of the company which characterizes the enterprise management efficiency, and added value, which is created at the enterprise and is distributed among all the participants of corporate management.

Practical value. The presented methodical developments allow the management of joint stock companies to apply the mechanism of managing change of the value of enterprise capital based on the generalizing index which displays the ratio of the enterprise’s market value and the value of its assets and can be decomposed on separate financing ratios, forming information and analytical support of the management process to determine the trends of effectiveness development, searching for opportunities for growth and influence factors.

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