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ALTER EGO ONLY FOUR TIMES? THE CASE STUDY OF BUSINESS PROFITS IN THE VISEGRAD GROUP

Katarína Valášková, Beáta Gavurová, Pavol Ďurana, Mária Kováčová

The paper studies a new point of view and the approach to profit as an inherent part of business finance as well as a symbol of every healthy economy. The fundamental function of the profit is a stimulus; it means initial motivator of the business activity. The profit provides core resources for survival at the business start and after the stabilization, it is the synonym for progress. The aim of this paper is to detect significant change-points in times series of EBITDA during the analysed period in every country of the Visegrad Group to recognize the progress years in the monotonic development. We use a method of homogeneity test of time series that delivers significant robust results. We observe the variable EBITDA to eliminate different tax, interest and depreciation policies of these emerging countries. The original research of this article is based on empirical results of business profits of the sample of 3,853 enterprises covered by the broad theoretical review. Firstly, we identify missing values; and detect the outliers by Z-score and Grubbs test. EBITDA of 1,058 Slovak enterprises, 688 Czech enterprises, 1,376 Polish enterprises and 731 Hungarian enterprises is analysed during the period from 2010 to 2018. We eliminate the inconsistent observations and construct average values of EBITDA. Secondly, we prove normality by Jarque-Bera test, and support it by Shapiro-Wilk test, Anderson-Darling test, Lilliefors test to deliver reliable results. Thirdly, we find an independency of distribution that confirm randomness by the Box-Pierce test. And finally, we identify the years that affect heterogeneity of EBITDA in the countries of the Visegrad Four. We uncover some really surprising results. For all countries in the Visegrad Four, the year 2013 is detected as a change-point at a significance level of 0.05. This significant year shifts EBITDA between two homogeneous series with corresponding central lines and recognizes the similar annual development within the groups. In addition, we discuss the results to the areas and factors affecting the business risk. The adjustable area represented by the business dynamism has no significant impact on the development of EBITDA. The uncontrollable macroeconomic factors such as a GDP, unemployment rate, inflation rate, average monthly gross wage, and Ease of doing business index demonstrate the same development of Slovak, Czech, Polish and Hungarian enterprises. We connect our gained results to the undisputed influence of these factors and its derived components on monotonic development of EBITDA. Despite the fact, that the countries are not economically interconnected as they used to be in the past, in has to be underlined that their mutual relations are still very narrow and close and that might be the reason, why identical results are achieved in the countries with divergent development.
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NON-FINANCIAL INDICATORS IN THE VALUATION PROCESS – CURRENT TRENDS

Vítězslav Hálek, Anna Borkovcová, František Hašek

In a global environment, where a major part of a business operates in an international environment, financial indicators seem insufficient, especially because they are historical indicators; they are unstable and do not reflect future developments. The instability in the environment of competition urges businesses to introduce a strategy focusing on the critical areas and factors that have impact on the business survival in the long term (He & Lu, 2018; Peršić, Janković, & Krivačić, 2017). Measuring the performance of companies must be based not only on the financial indicators but increasingly also on the non-financial ones. The financial indicators are best suited for use in strategic management, where they indicate whether the implemented stratégy helps to improve. The non-financial indicators determine the short-term direction of the organization and their identification is usually quite complex and sometimes subjective. The non-financial indicators are usually determined based on the experience and knowledge of the managers of the company (Režňáková, Karas, & Strnadová, 2017).
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FIRM VALUE AND CORPORATE CASH HOLDINGS. EMPIRICAL EVIDENCE FROM THE POLISH LISTED FIRMS

Sorin Gabriel Anton, Anca Elena Afloarei Nucu

In the context of imperfect markets, corporate liquidity represents an important asset to finance investments without raising costly external resources, which imply transaction and information costs. Moreover, the cash holdings offer a buffer against financial distress costs when the firm faces frictions in generating operating cash flows, both in volume and timely. On the other hand, the increase in cash holdings implies several costs: a liquidity premium, tax disadvantages, and agency costs for shareholders (Chang, Benson, & Faff, 2017). The trade-off theory streamlined in the literature governs the firms which need to balance costs and benefits of holding cash to determine the optimal level. While a lot of studies have been done in the direction of identifying the determinants of corporate cash holdings, going further, it is important to understand the relationship between non-earning assets (cash holdings) and firm value, in order to evaluate the corporate financial policies and to attain the right equilibrium between liquidity and profitability.
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INSTITUTIONAL OWNERSHIP AND SIMULTANEITY OF STRATEGIC FINANCIAL DECISIONS: AN EMPIRICAL ANALYSIS IN THE CASE OF PAKISTAN STOCK EXCHANGE

Rabeea Sadaf, Judit Oláh, József Popp, Domicián Máté

The traditional interpretation of corporate finance is characterized by ownership. Although, their rights are widely distributed among individual stockholders, but can be managed by few managers. Hence, conflict of interest is arisen among managers and shareholders and this results in an agency problem (Fama, 1980; Fama & Jensen, 1983). A number of empirical studies also confirmed the ownership concentration of firms, especially those dominated by few large owners or block-holders (La Porta et al., 1999). The concentrated structure of ownership also contributes towards agency conflict between block-holders and minority shareholders. From another perspective, the block-holders can benefit minority shareholders by their role in monitoring managers and also can be hazardous if they strive to achieve their own private goals (Shleifer & Vishny, 1997).
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IS ENTERPRISE RISK MANAGEMENT A VALUE ADDED ACTIVITY?

Mojca Marc, Danijela Miloš Sprčić, Marina Mešin Žagar

Severe consequences of the global financial crisis resulted in re-thinking the risk management processes and approaches. OECD (2009), BIS (2008), FSA (2008) and IIF (2007) suggested that corporate risks should be “high on the agenda” of every organization, highlighting the need for a comprehensive (enterprise-wide) risk management framework. What has been realized in the aftermath of the global financial crisis is that a failure to transmit information about risk exposures can be attributed to the traditional silo-based risk management (TRM) (OECD, 2009).
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KEY DETERMINANTS OF THE QUALITY OF BUSINESS ENVIRONMENT OF SMES IN THE CZECH REPUBLIC

Zuzana Virglerová, Lubor Homolka, Luboš Smrčka, Kornélia Lazányi, Tomáš Klieštik

The business activity of small and midsize enterprises plays an important role in the individual economies of the European Union. In this regard, Cumming, Johan, and Zhang (2014) and Gawel (2010) indicate that entrepreneurship has a significantly positive impact on GDP/capita, exports/GDP, and patents per population, and a negative impact on unemployment.
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COVERAGE OF FINANCING DEFICIT IN FIRMS IN FINANCIAL DISTRESS UNDER THE PECKING ORDER THEORY

Sergio Sanfilippo-Azofra, Carlos López-Gutiérrez, Begoña Torre-Olmo

Capital structure has been a frequent topic in financial literature because it is one of the most important decisions a firm can make. Although many important contributions have been made in this area, most of the research does not include firms in financial distress, so the financing decisions adopted by these firms are still not well known. The financing decisions of those firms are very important because most of the strategy decisions such as investments, market entry, or product diversification are considerably affected by the financial constraints faced by them (Bowe, Filatotchev, & Marshall, 2010).
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VALUE ALLOCATION – CONTRIBUTION AND RISK TO THE RELIABILITY OF FINANCIAL REPORTING

Adela Deaconu, Sorana Crisan, Anuta Buiga

The decision-usefulness theory (Staubus, 2008) connects the quality of the financial information disclosed with the right business decisions made by its users, and it is based on the notion that the relevance and reliability of financial reporting is crucial, having important practical implications. Moreover, according to the basic economic theory, it is shown that high financial reporting quality is a natural outcome of private equity monitoring and governance (Beuselinck & Manigart, 2007).
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DOES CONCENTRATION OF OWNERSHIP AND FAMILY CONTROL AFFECT SPECIALISATION/DIVERSIFICATION BUSINESS STRATEGIES?

Alejandro Hernández-Trasobares, Carmen Galve-Górriz

Interest in diversification has largely focused on three topics: the way in which business diversification can be measured, the relationship between diversification and business results and the factors that determine diversification. However, less attention has been paid to the impact of ownership structure (concentration and main shareholder) on degree of business diversification.
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THE INFLUENCE OF GENDER ON FINANCIAL DECISIONS: EVIDENCE FROM SMALL START-UP FIRMS IN SPAIN

Carmen Maria Hernandez-Nicolas, Juan Francisco Martín-Ugedo, Antonio Mínguez-Vera

The study of the characteristics of shareholders and managers and their effect on various variables related to the company, mainly its value, is extensive. Among the most analyzed characteristics are the shareholder structure, the composition of the board of directors, and the combining of the positions of CEO and chairman of the board of directors in the same person.
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