The Capital Structure Management in Companies of Selected Business Branches of Building in Conditions of the Czech Republic

Abstract

Abstract:Current paper has focused on the capital structure management theories. The theoretical part of the study fi rstly highlights the diff erences between trade-off theories and pecking order theories. In the empirical part there are then proved some signifi cant relationships between fi nancial indicators (debt/equity ratio and return on equity) of homogenous data sample from the Czech branch of building area. The aim of the study is to prove the diff erences between the capital structure development that are based on the type of the Czech companies' ownership in the selected NACE industrial branch and to point out some other particularities. The contribution of the paper is a comparison of the theory as well as practice of this issue in the Czech Republic. For pooled sample there are used selected fi nancial indicators of 57 building companies, all with turnover of more than CZK 1.5 billion. The choice of this criterion was a result of a change in effi ciency in Czech economy observed in the selected period. We can assume that this factor will have low infl uence on the selection of fi nancial resources of large corporations. We may even say that for large companies the availability of fi nancial resources remain unchanged. We have obtained annual data from 2004 to 2011. Due to such short estimation period, but the width of pooled sample on the other hand, it is used generalized method of moments (GMM) panel regression. There are also arguments of motivation to analyse business branch of building specifi cally. Moreover, an analysis is split according to ownership of companies into two categories, for the Czech and foreign owners. Based on the recent literature there has been made and tested three hypotheses. Results of the article have clearly proved the separation of managers from owner's positions. On the top of that, domestic companies are not pushed to distribute the realized profi t so much as foreign owners that prefer the return of their means invested into business. There is also a suggestion of future interests in research focused on other Czech business branches, too.

Analytical Method of Stimulation for Labour of Top-Managers

“…That is, the classic scheme of economic incentives for top managers consists of a fixed part (salary), additional surcharges (stock options) and bonuses and additional benefits (quarterly and annual premiums, car insurance, life insurance, etc.). The authors of [15] found that "the most attractive forms of incentives for managers are salary increases (18.85%), payment of bonuses and bonuses (18.2%), career growth (16.9%)" [29]. Given this and summarizing the existing approaches to the formation of the system of material incentives for top managers according to [4], [5], [25], we can identify two main indicators of this system: the share of salaries (basic and additional) of top managers in the general payroll (GP) (𝒚 𝟏 ) and the share of bonuses and other rewards of top managers in GP (𝒚 𝟐 ).…”

“…Some of them are motivated to provide strategic changes, and other are motivated only to support strategic status quo. Work of Růčková and Heryán [29] examines the possible phenomena of separation of top-managers from positions of the owner of company that requires to increase attention to the questions and instruments of stimulation of the first.…”

Graphing Capital Structure Analysis of IT Sector With Special Reference to HCL

“…He try to exploit the differences between the capital structure decisions for various degrees of free float rate and foreign paid in capital, and for those that have various market values. Petra and Heryán (2015) study the differences between the capital structure developments based on the type of the Czech companies' ownership in the selected NACE industrial branch with financial indicators of 57 building companies with turnover of more than CZK 1.5 billion. This study found that separation of managers from owner's positions.…”

Dependency of return on equity and use of finance sources in building companies in v4 countries

“…Symbols and are the constant of the model and residual part in the GMM model. The reason for choosing the above mentioned indicators also comes from the performed studies (such as Nivorozhkin [16], Hernardi & Ormos [9], Crnigoj & Mramor [4], Růčková [20], Růčková & Heryán [21]) that considered particularities of the European environment, mainly weaker availability of the market data. It is just the unavailability of the market data that makes it impossible to apply studies performed in the United Stated of America as most of their models mainly use the market value of the company as a factor.…”