Emission activity of joint-stock companies of Ukraine’s dairy industry

Economic Annals-XXI: Volume 130, Issue 5-6(2), Pages: 47-50

Citation information:
Shvab, O. (2013). Emission activity of joint-stock companies of Ukraine’s dairy industry. Economic Annals-XXI, 5-6(2), 47-50. https://ea21journal.world/index.php/ea-v130-14/

Olena Shvab
PhD Student,
Institute of Agrarian Economics, Kyiv, Ukraine
ya.elenashvab@yandex.ua

Emission activity of joint-stock companies of Ukraine’s dairy industry

Abstract. The article is devoted to theoretical and methodological aspects of emission activity of joint-stock companies (JSC) in dairy industry of Ukraine. Most of joint-stock companies in an agrarian industry nowadays demonstrate financial instability, low efficiency of equity and debt capital usage; do not realize practically their potential at the fund market and rarely do additional emissions of shares to attract new investments. Dairy industry companies of Ukraine are not an exception.

The most progressive way of attracting money for financing new and existent projects and enlarging production activity of JSCs is sale of shares on stock exchange. In fact, there appears to be a unique instrument that distinguishes JSCs from other forms of doing business. It was found that equity emissions by dairy JSCs on stock market take very small part in general amount of equity emissions by companies in Ukraine. The above-mentioned makes it impossible to use securities as a widespread instrument of liquid mortgage and narrows possibilities of the National Bank of Ukraine to refund banks. The local joint-stock companies of dairy industry prefer bank loans for financing assets to acquiring money through fund market. The usage of external recourses of financing demands a high return on capital because of significant costs on debt serving.

Share emission has a lot of advantages comparing with bank loans since there are no obligatory permanent payments. Yet, it is a good way for a company to attract a big amount of money. At the same time, additional share emission can lead to dilution of equity due to increase of quantity of shares without simultaneous change of company’s value, and as a consequence losing a certain part of rights on a company.

Keywords: Share Capital; Joint-Stock Company; Share Emission; Dividend Policy; Market Capitalization; Dairy Industry

JEL Classification: G31

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Received 16.04.2013