Impact of Shareholders Conflict on Market Capitalization: Example of Vimpelcom

Abstract

Authors: Victoria A. Cherkasova National Research University The Higher School of Economics

Yuri Y. Dranev National Research University The Higher School of Economics dranioff@hotmail.com

Shareholder conflict may significantly impact market capitalization of a firm because of rising risk of additional reputational costs. In this paper we analyze changes in value of Russina telecommunication company Vimpelcom after mass media announcements about developments in lawsuits between major shareholders in 2005-2013. We suggest methodology of prediction of market reaction. All announcements are classified according to several characteristics. Calculation of abnormal return allowed us to estimate cumulative losses of shareholders of Vimpelcom due to the conflict between Altimo and Telenor.