Companies profitability under economic instability: evidence from the manufacturing industry in Russia

Spitsin, Vladislav; Ryzhkova, Marina; Vuković, Darko; Anokhin, Sergey

doi:10.1186/s40008-020-0184-9

Cited by 20 publications

(20 citation statements)

References 45 publications

(45 reference statements)

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“…High-tech industries are generally recognized as national economies development drivers (Varum et al, 2009;Simonen et al, 2015;Spitsin et al, 2020). According to Varum et al (2009), Lang et al (2012), Czarnitzki and Susanne (2012) and Brenner et al (2017), high-tech industries are crucial in fixing destabilizing factors and they are sustainable to act as hot spots in a crisis economy.…”

Section: Introductionmentioning

confidence: 99%

Company performance and optimal capital structure: evidence of transition economy (Russia)

Spitsin

Vuković

Anokhin

et al. 2020

JES

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PurposeThe paper analyzes the effects of the capital structure on company performance (return on assets). The analysis is conducted in a large sample of high-tech manufacturing and service companies in the transition economy (Russian Federation). In addition to the aggregated analysis, separate investigations are conducted to scrutinize the impact of company age, size and location factors (the effects of agglomerations). This research postulates the existence and variability of the optimal capital structure and its dependence on economic crisis.Design/methodology/approachWe utilized a large sample that includes 1,826 enterprises over the period from 2013 to 2017. The estimation was performed using the panel-corrected standard error estimation technique (Prais–Winsten regression) to account for the panel nature and distributional properties of our data. The existence of the optimal capital structure was assessed based on a curvilinear (quadratic) function.FindingsThe results are consistent with the Static Trade-off Theory and show that this theory is applicable to countries with transition economy. They demonstrate that effective management of the capital structure can increase return on assets by 16–22%. The optimal share of borrowed capital is higher for small businesses compared to larger ones and for enterprises located in agglomerations compared to those located in other regions. A greater increase in profitability can be achieved by larger firm companies compared to smaller ones. High share of borrowed capital leads to negative profitability, i.e. to losses by enterprises. No significant differences in profitability growth were identified between young and mature enterprises. The optimal share of borrowed capital that maximizes return on assets is in the range of 0–21%.Research limitations/implicationsDue to the SPARK policies, our access to the data has been limited to a five-year window, which imposed certain limitations on the choice of econometric methods we could have employed and somewhat limited our ability to contrast the effect of the crisis period with the period of stability. In this sense, although our results pertaining to the effect of the crisis could be treated as conservative, future research should consider extending the panel to include more years into consideration.Practical implicationsWe identified significant differences between optimal capital structures and actual capital structures for high-tech enterprises. The contribution of this study is that the calculations were made for a country with a transition economy under crisis conditions. Countries with transition economies and developing countries tend to be characterized by a high level of interest rates on loans and a high proportion of borrowed capital in total assets. This poses difficulties for companies relying on borrowed capital to finance their operations. At the same time, our results demonstrate that in transition economies, enterprises in high-tech industries do have an optimal capital structure that allows maximizing firm performance. That is, Static Trade-off Theory is applicable to transition economies characterized by high interest rates on loans.Originality/valueThe novelty of this study lies in the detailed analysis of high-tech industries in Russian Federation. This analysis makes use of sophisticated econometric techniques for the first time in this context.

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Section: Introductionmentioning

confidence: 99%

Company performance and optimal capital structure: evidence of transition economy (Russia)

Spitsin

Vuković

Anokhin

et al. 2020

JES

Self Cite

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“…Los investigadores de la dinámica empresarial, economía industrial, la gestión estratégica, la contabilidad y las finanzas han tratado de identificar las fuentes de variación de la rentabilidad de las empresas (Goddard, Tavakoli y Wilson, 2005). Diferentes autores (Aulová et al, 2019;Floros & Voulgaris, 2016;Lososová & Zdeněk, 2014;Prijadi & Desiana, 2017;Rasiah et al, 2014;Spitsin et al, 2020) han planteado sus teorías acerca de la rentabilidad en las empresas y sus determinantes aplicados a diferentes sociedades, sectores y enfoques. Por ejemplo, factores económicos del rendimiento empresarial (externos a la organización) y los factores organizativos (comportamiento financiero de la empresa y adecuación del entorno) han demostrado en investigaciones anteriores que operan de forma independiente y que los factores internos están asociados de forma más significativa y directa con el rendimiento empresarial (Appiah-Adu et al, 2001).…”

Section: Revisión De La Literaturaunclassified

Análisis de rentabilidad, endeudamiento y liquidez de microempresas en Ecuador

Farías

Pacheco

Correa-Soto

2021

retos

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Las microempresas representan un componente significativo para el progreso económico de Ecuador. Esta investigación analiza y compara indicadores financieros como la rentabilidad financiera, el endeudamiento y la liquidez corriente de las microempresas de la provincia del Guayas con las del resto de provincias de Ecuador. El análisis utilizó una metodología cuantitativa de tipo descriptiva de diseño transversal para 13 768 microempresas de la provincia del Guayas y 16 093 microempresas del resto de las provincias de Ecuador que reportaron su información financiera a la Superintendencia de Compañías, Valores y Seguros al año 2019. Para comparar estos grupos se realizó una prueba t para muestras independientes con varianzas desiguales. Los resultados de esta investigación indican que, con un nivel de confianza del 95 %, el promedio de endeudamiento y la liquidez corriente media son mayores en la provincia del Guayas mientras que las microempresas del resto de Ecuador reportan una mejor rentabilidad financiera promedio. A pesar de que la provincia del Guayas tiene el mayor porcentaje de microempresas en el país, no es condición suficiente para concluir que sus indicadores financieros, en promedio, son mejores que los del resto de Ecuador. Esta investigación pretende ser un aporte al desarrollo de líneas de trabajo que contribuyan a la elaboración y diseño de políticas que ayuden a la supervivencia y desempeño empresarial de las microempresas.

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“…Regarding the driving themes, it is important to note that decision making is the main theme for analysing business failure. Indeed, some studies [54,[137][138][139] affirmed that corporate governance's correct decision making could avoid financial insolvency scenarios. failure led to decision making to avoid this scenario.…”

Section: Content Analysis 421 Research Trendsmentioning

confidence: 99%

Explanatory Factors of Business Failure: Literature Review and Global Trends

2021

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This study aims to provide a bibliometric analysis of business failure research, recognise the main existing research topics and establish future research challenges. The results, based on a sample of 588 articles, show that the number of published papers and citations has grown steadily, especially in the last 14 years. The most productive and relevant journals, countries, institutions and authors are presented using bibliometric performance indicators. In addition, through the graphical mapping of strategic diagrams, this study identifies the most significant research trends and proposes several directions for future research. The results of this research may be helpful for beginner researchers and experts in business failure, as they contribute to bringing clarity to this line of investigation. These results reveal all the aspects involved in business failure research, analysing its temporal and methodological characterisation, and the most prolific authors who have participated in its study (see, i.e., H. Li), leading journals (see, i.e., Expert Systems with Applications) or academic institutions that have headed the scientific analysis of this business phenomenon. Likewise, it has been possible to identify three main areas in which the research on business failure has been focused: business, management and accounting; economics, econometrics and finance; and social sciences. In addition, a complete, synthesised and organised summary of the various definitions, perspectives and research trends are presented.

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Companies profitability under economic instability: evidence from the manufacturing industry in Russia

Cited by 20 publications

References 45 publications

Company performance and optimal capital structure: evidence of transition economy (Russia)

Company performance and optimal capital structure: evidence of transition economy (Russia)

Análisis de rentabilidad, endeudamiento y liquidez de microempresas en Ecuador

Explanatory Factors of Business Failure: Literature Review and Global Trends

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