Financial Liquidity Management Strategies in Polish Energy Companies

Zimon, Grzegorz

doi:10.32479/ijeep.9150

Cited by 15 publications

(7 citation statements)

References 32 publications

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“…In the research on the subject, one can find many studies whose authors claim that high liquidity negatively affects the level of profitability (Chowdhury and Zaman 2018;Ding et al 2013;Enqvist et al 2014;Bei and Wijewardana 2012;Vahid et al 2012;Andrew and Osuji 2013;Mamatzakis and Bermpei 2014;Puławska 2021;Clampit et al 2021;Mun and Jang 2015;Hendrick 1997;Zimon 2020). Deloof (2003), using cash the conversion cycle for 1009 Belgian firms, also finds negative relationships between gross profit, net working capital components and financial liquidity.…”

Section: Literature Reviewmentioning

confidence: 99%

An Analysis of the Financial Liquidity Management Strategy in Construction Companies Operating in the Podkarpackie Province

Zimon

Nakonieczny

Chudy-Laskowska

et al. 2021

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The activity of each construction company in conditions of high competitiveness is exposed to a number of risks that make it difficult to maintain high financial liquidity. In order to provide the continuity of ongoing economic processes and to be able to develop, entities are forced to build optimal financial management strategies for them. Enterprises can choose between a conservative, moderate and aggressive strategy, which is largely determined by the way they manage their current assets and short-term liabilities. In the case of construction companies, it is also not without significance that they are particularly sensitive to fluctuations in the economic situation and changes in the macroeconomic environment, which imply the availability of funds. The purpose of this paper is to analyze the financial liquidity management strategy of construction sector Polish enterprises from the Podkarpackie Province in 2017–2019 and the impact of this strategy on the profitability of the surveyed entities. In order to achieve the goal, the issues related to the classification of financial liquidity and individual liquidity management strategies are discussed. The issues and the goal set determined the choice of research methods. Literature studies, the Mann–Whitney U test, cluster analysis and Ward’s method were used. The research was carried out on a group of the 10 largest construction companies from the Podkarpackie Province. The selection of entities for the research was deliberately based on enterprises that submit their financial statements to the National Court Register. The conducted research showed that small and large enterprises applied different liquidity management policies even though they operate in the same industry and region. The small entities preferred a conservative strategy, while large entities preferred a moderate strategy. The existence of an inverse relationship between the phenomenon of financial liquidity and profitability of economic entities was also confirmed.

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Section: Literature Reviewmentioning

confidence: 99%

An Analysis of the Financial Liquidity Management Strategy in Construction Companies Operating in the Podkarpackie Province

Zimon

Nakonieczny

Chudy-Laskowska

et al. 2021

Risks

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“…To put it another way, Iranian companies that use less cash and borrow more to finance their assets are pursuing aggressive policies, which has led to their financial insolvency. The aggressive strategy is a risky strategy characterized by low financial liquidity [198]. According to this risky approach, firms often tend to increase short-term liabilities in the liabilities structure.…”

Section: Results Of the Research Modelmentioning

confidence: 99%

Corporate Social Responsibility Disclosure (CSRD) and Financial Distressed Risk (FDR): Does Institutional Ownership Matter?

et al. 2022

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This study aims to investigate the effect of corporate social responsibility disclosure (CSRD) on financial distressed risk (FDR) among firms listed on the Tehran Stock Exchange (TSE). This paper also examines whether there is a negative linkage between institutional ownership as a corporate governance mechanism and corporate bankruptcy. The final research purpose is to analyze if there is a moderating effect of institutional owners on the relationship between CSRD and FDR too. The study sample consists of 200 firms listed on the TSE between 2013 and 2018, and the statistical model is logistic regression. When FDR is assessed under both Article 141 of Iran’s business law and the Altman Z-score model, our results on the main research hypotheses are quite similar. Considering the social and cultural conditions and economic situation of the Iranian market, the results show that firms with a high level of CSR disclosure are not able to make themselves more creditworthy and do not have better access to financing, resulting in more financial insolvency. Our findings confirm institutional shareholders play a vital role in facilitating a firm’s emergence from bankruptcy. The results also demonstrate financial distress risk is less seen among companies with more institutional owners that disclose more CSR information. In other words, since the goals related to CSR are long-term and Iranian institutional investors have a long-term horizon towards the company, the presence of more institutional owners within a firm push managers to provide additional voluntary CSR disclosure so firms can maintain the trust of their shareholders at the highest possible level and prevent financial distress. Our additional analysis indicates there is a positive association between financial leverage and firm failure, whereas the current ratio and ROA are negatively connected with corporate bankruptcy. Finally, when FDR is assessed on the Altman Z-score model, our evidence supports a negative relation between purchase and sale-related party transactions and bankruptcy risk, which is consistent with the efficient transaction hypothesis.

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“…Liquidity and profitability are intertwined but not always parallel. Both financial liquidity and profitability are the core categories of enterprise activities, which, in order to function efficiently, the company should treat as equally important [9,24,25]. The maintenance of financial liquidity in a company affects its viability.…”

Section: Literature Reviewmentioning

confidence: 99%

Application of Canonical Variate Analysis to Compare Different Groups of Food Industry Companies in Terms of Financial Liquidity and Profitability

et al. 2021

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Financial liquidity and profitability are two critical phenomena present in the financial economy of a company, whose relations depend on each other and may course in different directions. At the same time, they are an example of the complexity of the problem, which demands a proper approach, allowing one to reconcile two opposing objectives of any enterprise, i.e., maximizing the benefits for the owners and minimizing the risk of losing financial liquidity. Until now, the relationship between liquidity and profitability has not been examined explicitly, using multidimensional methods in particular. Nevertheless, the links between profitability and financial liquidity maintenance ensure the sustainable development of enterprises in different branches. This paper formulates two aims: scientific and practical. The scientific one concerns adopting the canonical variate analysis method to visualize the differences and relationships between food industry companies regarding financial liquidity and profitability. The practical one relates to indicating the relationship between financial liquidity and profitability in different groups of food industry companies. To study the relationships between the selected groups of enterprises and describe them, the liquidity and profitability ratios were utilized, involving canonical variate analysis based on transformation by linear combination and singular value decomposition. The analysis found that the most important feature highlighting the group of the examined entities regarding financial liquidity was the cash conversion cycle. The research results showed the existence of multidirectional relationships between liquidity and profitability. The research indicates that they depend on indicators describing financial dependencies and the industries in which they operate. This led to a much deeper and broader interpretation of the assessment of the financial situation of companies to support their sustainable development.

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Financial Liquidity Management Strategies in Polish Energy Companies

Cited by 15 publications

References 32 publications

An Analysis of the Financial Liquidity Management Strategy in Construction Companies Operating in the Podkarpackie Province

An Analysis of the Financial Liquidity Management Strategy in Construction Companies Operating in the Podkarpackie Province

Corporate Social Responsibility Disclosure (CSRD) and Financial Distressed Risk (FDR): Does Institutional Ownership Matter?

Application of Canonical Variate Analysis to Compare Different Groups of Food Industry Companies in Terms of Financial Liquidity and Profitability

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