APPROACH TO MANAGING TECHNOLOGY COMPANIES’ MARKET CAPITALIZATION UNDER ECONOMIC CYCLES

Abstract

The paper proposes an integrated framework for managing the market capitalization of technology companies through the lens of economic cycles. Valuing technology businesses is especially sensitive to changes in discount rates, risk premia, and investor expectations, because a large share of their value derives from distant cash flows tied to future products, platforms, and network effects. The theoretical foundation synthesizes Kondratiev long waves, Kuznets, Juglar, and Kitchin cycles with the financial cycle of credit and asset prices, alongside real-options logic and the dynamic trade-off paradigm. On this basis, the paper advances a “value triad”: growth rate g, weighted average cost of capital, and risk appetite, as the central nexus linking macro conditions, valuation multiples, and market capitalization. The practical section formalizes four monitoring layers (macro-market, industry-technology, competitive, and internal operating) and maps them to cycle-specific corporate-finance decisions: Research & Development and Go-to-Market policy, the choice of debt and convertible instruments, rules for share repurchases and seasoned equity offerings, and investor-relations communication to reduce information asymmetry. For each phase (expansion, overheating, liquidity tightening, and the trough) the framework specifies indicators, threshold metrics, and corresponding “signal – action” tactics. The novelty lies in combining multi-level cycles with operational levers of capitalization management, shifting firms from a reactive to a proactive posture. The expected effect is a lower error cost during volatility and faster capture of “windows of opportunity” in recovery. Paper will be interesting for researchers and analysts, stock market professionals, stock exchange regulating bodies, investment banks, international financial organizations, non-governmental associations. Future research will empirically test the elasticities of valuation multiples with respect to changes in weighted average cost of capital, risk premia, and cohort quality across subsectors.