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2.2.3. Branch factors

In A.Shlejfer and R.Vishni's research [100] the theoretical explanation, why liquidating cost of the company more low in the branches testing financial difficulties is offered. Authors assert, that liquidating cost of a fixed capital in this case more low as realisation of assets in the conditions of recession in branch is possible only under the lowered prices.

Markdown depends on degree of specialisation of a fixed capital and possibility of their application in other branches without additional charges on their updating. In V.Acharija's work [23] dependence of the rate of restoration on liquidating cost of a fixed capital is investigated, and following hypotheses are checked:

• recession in branch or recession in economy as a whole at the moment of default approach negatively influences the restoration rate;

• the companies which are carrying out economic activities in branches with smaller quantity of competing participants, have the lowered rates of restoration under obligations as the quantity of potential buyers of the basic company assets in case of liquidation is limited;

• low level of liquidity in branch negatively affects the restoration rate under obligations of the company in case of a default as in branch there are not enough money resources on purchase of its fixed capital;

• in branches in which degree of specialisation of a fixed capital above and possibilities of their alternative use are limited, rates of restoration more low.

Transferred above a hypothesis are checked in V.Acharija's work [23] by means of the model, explaining which variables are average yield of shares on branches, average factor Q on branches, an index of concentration, branch level of liquidity and degree of specialisation of a fixed capital in branch. A number of other researches, including I.Izvorski's works [78] and P.Varma [108], studies dependence of the rate of restoration from transferred above branch indicators.

V.Acharija's research [23] confirms positive dependence of the rate of restoration on average yield of shares on branch, average factor Q on branch and branch level of liquidity. Given results coincide with results of research of P.Varma [108]. Degree of specialisation of a fixed capital in case of recession in branch has negative influence on the restoration rate. I.Izvorski's research [78] confirms negative dependence of the rate of restoration on a concentration index.

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A source: Antonova Ekaterina Njaimovna. Estimation of the recovery rate for corporate bonds of Russian issuers. Thesis for the degree of candidate of economic sciences. Moscow 2013. 2013

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