On the Corporate Financial Policy under Shocks and Restrictions

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Abstract

Organizational capital is a metric for the quality of corporate governance. The author scrutinizes the influence of the organizational capital, shocks and flexibility on the company's financing policy. External shocks (like increased funding costs, external sanctions) force Russian public companies to switch to internal sources of funding, acting in accordance with the “prevention motive” hypothesis of John Maynard Keynes: under conditions of financial constraints, an economic entity uses dividends as an investment resource. Financial flexibility allows responding to external shocks by adjusting the capital structure to allocate cash flows for subsequent financing of investment projects.

About the authors

Sergey Ivanovich Lutsenko

Institute for Economic Strategies of the Social Sciences Division of the Russian Academy of Sciences

Russian Federation, Moscow

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