Probability of Firm Expropriation Modeling

This article presents a dynamic equilibrium model of firm valuation under the risk of expropriation. It was determined that equilibrium weighted average value of capital of such firm should be increased by the probability of expropriation. There has proposed a model that determines the probability of firm expropriation under the conditions of indifference between the capture of the company and monthly payments for the "protection service" to a high-ranking racketeer