An article by the leading expert of the Control Department of the President of the Russian Federation, NII KPU expert Sergey Lutsenko, “The Influence of Information Signals on Future Profit”, was published in the journal Strategic Decisions and Risk Management (No. 4, 2019).

The article discusses the influence of information signals on the future profits of Russian companies. Information signals may influence the behavior of investors in assessing future profits. Profit in the future may be affected by indicators of internal growth and shock. Shock indicator allows you to take into account the situation when the company will move from debt financing to domestic sources of financing in order to reduce the level of loss of assets associated with the impact of shocks. Internal financing is carried out at the expense of the cheapest source - profits. It allows you to reduce the level of debt risk by adjusting the capital structure (repayment of part of the debt). Indicators of shock and domestic growth for investors are an information indicator of the company's development prospects.

According to the author, using the indicators “internal growth” and “shock” it is possible to assess the role of the management of Russian public companies when making decisions within the framework of an economic business strategy. Along with dividend payments, domestic growth and shock carry information about future profits to shareholder investors. In the framework of the presented research, the author concludes that the management of Russian companies strives to act in the logic of a precautionary motive (precautionary motive - the hypothesis of precautionary savings is a kind of buffer from negative influences (shocks) from external capital markets)) - the company's readiness to "switch" to internal sources of financing (saving money for domestic investment). The company creates an internal cash reserve in order to cope with lower losses associated with shocks affecting profit margins.

Read the full article in Expert Library NII KPU .