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The CBA Analysis of IFRS Implementation in the Czech Republic

Author(s): Irena Honková / Language(s): English / Publication Year: 0

Keywords: International Financial Reporting Standards (IFRS); International Accounting Standards (IAS);

As part of the ongoing harmonization of accounting system there is an increasing tendency to keep the accounts under IAS/IFRS. Consequently, a research in companies following the IAS/IFRS has been conducted. The aim of the research was to identify information, financial and time demands and also the benefits of the IAS/IFRS implementation. It was found that more companies use the services of an external consultant than an internal employee. Businesses normally do not share their knowledge. The costs of the implementation process are most often up to 100 thousand Euros, but most businesses acknowledged additional unquantified costs. The duration of the implementation process was to one year. There are different views of the respondents on the level of individual standards. Most respondents admitted making mistakes in the first years of the implementation, but these were rather minor flaws. Regarding the perceived benefits, the majority of respondents agreed that the IAS/IFRS enable good comparability. However, when it comes to their brand and financial statements, they stated that for the company’s reputation the brand was more important than financial statements. It was found, however, that the majority of businesses have not experienced a reduction in the cost of capital.

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Profitability of Agricultural Entities in Countries of Visegrad Group

Author(s): Jana Hvozdenská / Language(s): English / Publication Year: 0

Keywords: financial analysis; agricultural enterprises; financial reports; profitability indicators;

Based on selected individual data obtained from Farm Accountancy Data Network database the output efficiency of agricultural entities in countries of Visegrad Group is evaluated. This paper deals with the relationship between the profitability indicators as return on assets, return on equity, return on sales and the milk yields of agricultural entities in the states. The entities were divided into size categories according to outputs. The aim of the paper is to confirm the relationship between the indicators of profitability, the milk yields and the size of farming units. The survey results show that the profitability indicators with unit size are decreasing, milk yields on the other hand are increasing, however they are not unambiguous.

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The Yield Curve as a Predictor of Economic Activity – the Case of Germany, Great Britain and France

Author(s): Jana Hvozdenská / Language(s): English / Publication Year: 0

Keywords: bonds; GDP prediction; slope; spread; yield curve;

In this paper we study the ability of the yield curve to predict GDP activity in Germany, France and Great Britain. The dataset contains the spread between 10-year and 3-month sovereign bonds and real GDP of the countries mentioned above between the years 2000 and 2018. The natural and probably the most popular measure of economic growth is GDP growth, taken quarterly. The steepness of the bond yield curve should be an excellent indicator of a possible future economic activity. A rise in the short rate tends to flatten the yield curve as well as to slow down real growth the near term. The relationship between the spread and future GDP activity was proved already before. The results showed that the prediction of the GDP growth or decrease was proven after year 2008 (the financial crisis) in all mentioned countries, the predictive power of the yield curve was lowered before the year 2008. Certainly the simple yield curve growth forecast should not serve as a replacement for the complex predictive models, it does, however, provide enough information to serve as a useful check on the more sophisticated forecasts. The results showed that the best predictive lag is a lag of five quarters. The theory says that it should be lag of four quarters. The results presented also confirm that 10-year and 3-month yield spread has significant predictive power for real GDP growth after financial crisis. These findings provide further evidence of the potential usefulness of the yield curve spreads as indicators of the future economic activity. These findings might be beneficial for investors and provide further evidence of the potential usefulness of the yield curve spreads as indicators of the future economic activity.

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Investing in Emerging Markets: Contrasted Mean and Median Models in Egyptian Stock Markets

Author(s): Mai A. Ibrahim,Mohammed El-Beltagy,Motaz Khorshid / Language(s): English / Publication Year: 0

Keywords: Emerging markets; higher moment models; median models; mixed-Integer linear programming; non-Linear programming;

Emerging Markets return distributions have shown significance departure from normality were they are characterized by fatter tails relative to the normal distribution and exhibit levels of skewness and kurtosis that constitute a significant departure from normality. Therefore the classical Markowitz Mean-Variance is not the most suitable portfolio optimization model to apply for emerging markets since it assumes normally distributed returns and a quadratic utility function. Alternative models were suggested in the literature, higher moments models have been introduced to account for the insufficiency of the description of a portfolio by only its first two moments while the median model has been introduced as a robust statistic which is less affected by outliers than the mean. Alternative risk measures have been introduced instead of variance to capture the effect of risk. The purpose of this paper is to investigate the performance of different portfolio models in an emerging market such as the Egyptian Market to decide which can suit better the characteristics of this market. Higher moment models including Mean-Variance-Skewness and Mean-Variance-Skewness-Kurtosis and median models including Median Value-at-Risk and Median Mean-Absolute-Deviation are compared to the Markowitz model. The formulation of the models varied between single-objective nonlinear programming problems (NLP), single-objective mixed-integer linear programming (MILP) problems and single-objective quadratic programming problems. All the models are tested on real financial data in the Egyptian main Index EGX30. In general, median models have shown better performance than higher moments models and specifically the MedianVaR model. The MedianVaR model has provided the higher final wealth for the investor over the entire period of study. These findings can guide the decision making process for portfolio optimization in the Egyptian market were one can barely find any study on the portfolio optimization problem for the Egyptian Market in specific and the MENA region in general.

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Key Performance Indicators System for Small and Medium-sized Enterprises in Non-productive Automotive in the Czech Republic: A Research Design

Author(s): Nikola Janíčková,Ondrej Zizlavsky / Language(s): English / Publication Year: 0

Keywords: key indicators; performance measurement; Balanced Scorecard; small and medium-sized enterprises; company performance;

The aim of this article is to outline the research process that will be driven by small and medium-sized enterprises (SMEs) operating in the automotive industry as a car dealers or as other nonproductive works. The research will lead to the creation of key performance indicators system based not only on the Balanced Scorecard approach, but also on the other methodologies like as critical success factors that can improve and streamline financial management not only for firms in non-productive Automotive, but also for other companies. The research methodology consists of two parts. First part is literature review of scientific knowledge and finding a gap in knowledge in this area and second is schedule and planning of individual parts of the research, including to define the main research questions. The scientific aim of upcoming research is to define a system of key performance indicators based on the Balanced Scorecard approach, which will be applicable to all SMEs in the Czech Republic operating in the selected sector. The results of literature review show that it is necessary to define a system of financial performance management for nonproductive SMEs, because there is a lower level of knowledge and understanding in the financial performance and key indicators. But even this research cannot be without certain limitations. The limitation is that SMEs often lacking the necessary finances or knowledge of how implement this approach.

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Analysis of Financial Market Using Soft Computing Techniques

Author(s): Zuzana Janková,Petr Dostál / Language(s): English / Publication Year: 0

Keywords: artificial intelligence; financial market; fuzzy logic; soft computing techniques;

Soft computing is part of artificial intelligence containing fuzzy logic and artificial neural networks. Soft computing based systems are able to extract relevant information from large data sets by discovering hidden patterns in the data. The combination of these two techniques can provide an intelligent system with more ability and flexibility. Financial markets are becoming increasingly complex and demanding to predict stock price movements due to their non-linear and dynamic nature. The present study combines fuzzy c-means clustering and a neural network to support investment decisions in the ETF in the US stock market. The proposed model is designed to help investors identify profitable opportunities in stock markets.

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Stock Price and Investment Decisions – Case of Warsaw Stock Exchange

Author(s): Magdalena Jasiniak / Language(s): English / Publication Year: 0

Keywords: financial markets; behavioural finance; low price anomaly; investment decisions;

The main aim of the paper is to verify whether the price is one of the determinants of the investment decisions. According to theory of market efficiency, stock price should not influence rate of investment return and investment decisions. However, investors who are influenced by behavioural biases show a greater tendency to invest in the low – priced stocks. This phenomenon occurs in particular among investors with less experience who are under the illusory impression that low – priced stocks will grow faster and will bring above – average profits. This has an impact on managerial decisions and the desire to keep the company’s stock prices at optimal price range (f.e. by dividing the shares) to ensure effective capital allocation and liquidity of the company’s stocks. Article presents the results of questionnaire study conducted among individual investors in Poland. The analysis is based on the logit model. The results of the proved that price does matter in investment decision process and influence the future profits.

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Financial Position of the Slovak Spa Companies

Author(s): Sylvia Jencova,Petra Vašaničová,Igor Petruška / Language(s): English / Publication Year: 0

Keywords: competitiveness; spa companies; indicators; model; Slovak Republic;

In recent years, the Slovak spa companies, through increasing in spa guests (self-payers, or clients of insurance companies), has been significantly contributing to the support of tourism, especially health tourism. The aim of the paper is to evaluate the financial position of non-financial business entities divided by SK NACE 869 - Other human health activities. In the analysis, we use financial data about 21 spa companies for the period 2013-2017 that are obtained from the Register of Financial Statements of the Ministry of Finance of the Slovak Republic. The research sample is considered according its revenues in a given period. In terms of legal form, research sample consists of 16 joint stock companies (a.s.), 3 limited liability companies (s.r.o.), and 2 stateowned companies (s.o.). Financial and economic analysis of spa companies in space is determined using four methods of Multi-Criteria Evaluation. Within this methodology, we use productivity and intensity indicators, namely basic earning power of the decision making unit, return on sales, personal costs-to-net turnover ratio, value added-to-sales ratio. Results have shown that the best position in the period 2013-2017 have had these Slovak spa companies: Spa Bojnice, Spa Lúčky, Spa Dudince, Bardejov Spa, and Slovak Health Spa Piešťany.

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Cultural Diversity in Working Teams

Author(s): Yvona Kaňovská,Klára Strašáková,Lenka Janošová / Language(s): English / Publication Year: 0

Keywords: cultural diversity; team effectiveness; team performance; team influence;

With ever-increasing globalization and new trends in the labor market, we are increasingly confronted with teams that are not homogeneous, whether this heterogeneity is based on a different gender, age, nationality or race. This paper focuses on cultural diversity, as due to the openness of the Czech economy and the high share of foreign capital, Czech managers must face culturally diverse teams more often at the workplace. It is also necessary to adapt the style of leadership and communication to exploit the potential of cultural diversity. Although some authors deny the existence of a relationship between diversity and team performance, most authors agree that diversity enhances the competitiveness of a company and assists in increasing the firm’s value. On the other hand, however, authors admit that diverse teams face several problems, which if not solved, can end up harming the business. The aim of this article is to present studies on cultural diversity using a systematic literary review and to help answer the question of whether cultural diversity affects the effectiveness and performance of teams and, if so, whether it is a positive or negative influence, and what factors have an impact on it.

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Foreign Capital Inflows and Domestic Savings in Turkey

Author(s): Özcan Karahan / Language(s): English / Publication Year: 0

Keywords: Capital Inflows; savings; ARDL Model;

Since a high level of financial funding is needed to stimulate investment and thus enhance economic growth, most of the developing countries have sought to attract foreign capital to their financial system. Accordingly, after the implementation of different policies aiming the country to be attractive for foreign funds, Turkey have attracted huge financial capital to the own economy over the last decades. This study aims to determine the impact of capital inflows on total saving in Turkey by using ARDL Bound Testing Approach for quarterly data between 2002 and 2018. Empirical findings indicated that capital inflows to Turkey could not create the positive effect on total saving as much as expected from them. This is because foreign funds provided by capital inflows to Turkey had a substitution effect rather than completing domestic savings in the Turkish Economy. This result also shows that external dependence and thus fragility of financial markets in Turkey have significantly increased. Therefore, it is necessary to give priority to policies related to the management of capital inflows in order to ensure financial stability and achieve sustainable growth in Turkey.

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The Role of IFRS 15 in the Evaluation of the Effects of Business Model Innovation

Author(s): Mariusz Karwowski / Language(s): English / Publication Year: 0

Keywords: IFRS 15; revenue; business model innovation; financial statements;

The proper recognition of revenue is an important element in the preparation of the statement of profit or loss and other comprehensive income and, as such, it is an extremely difficult and complex issue. The challenge is greater in the context of business model innovation (BMI), which now constitutes a key source of growth and value creation. The objective of the research underlying this article is to determine the role of the new IFRS 15 “Revenue from Contracts with Customers” in evaluating the effects of BMI. A review of pertinent literature was conducted as well as an empirical study based on financial statements for the year ending in 2018 of companies from sectors in which BMI very often occurs: biotechnology, games, IT, and the pharmaceutical industry. Based on the research into relevant literature and the empirical study, it was found that IFRS 15 enables companies to match revenue more closely to the work performed to earn it and to calculate the value transferred to customers. Due to the complexity of these rules, when evaluating the effects of BMI, it is important to provide information supplementing the presentation of revenue in the statement of profit or loss and other comprehensive income. In the field of accounting research, this article may be treated as an attempt to look at revenue, the key element of financial statements, from the perspective of BMI.

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Methodological Aspects of Evaluating the Efficiency of Public Procurement in order to Improve the Effectiveness of Financial Control in the Regions of Russia

Author(s): Oksana Kashina,Natalia N. PRONCHATOVA-RUBTSOVA,Sergey Petrov,Nadezhda Yashina / Language(s): English / Publication Year: 0

Keywords: public procurement; budget funds; efficiency; evaluation methodology; financial control;

The world economy instability, the crisis phenomena and the need to quickly overcome their consequences explain the flexibility requirements of the state financial policy, which ensures the transition to an innovative model of socio-economic development. An important mechanism of state regulation is the public procurement system development, which will allow to rationally use budget funds in the limited financial resources context, given the desire to fully implement public functions. In this regard, the study purpose is the development of an evaluation the public procurement efficiency methodology in order to improve the financial control effectiveness in the Russian regions. The proposed methodology for assessing the public procurement efficiency is based on a systematic and integrated approach, which requires the formation of an indicators’ set, including such key indicators as the share of capital and current purchases in regional budget expenditures, savings on the state order conclusion, the share of the contracts’ cost with a single supplier of the total contracts’ value. In the work, modern scientific tools and various research methods are used: economicstatistical, system-analytical and expert assessments. Methodology approbation was carried out on the example of the Russian regions on the basis of official open data from the Unified Procurement Information System, the Federal Financial Monitoring Service, the Federal Treasury of the Russian Federation for 2016-2018. The practical implementation of the proposed methodology allows ranking the regions on the basis of a consolidated indicator for evaluating the public procurement efficiency, taking into account the established indicators. The analysis results of this annual rating can be used in the state executive bodies work in making concepts for the territorial development aimed at improving public administration, developing a competitive public procurement market, improving the efficiency and transparency of using budget funds to increase the financial control effectiveness and maximize satisfaction social needs.

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Evaluation of Financial Health of Companies in Slovak Republic Based on Selected Mathematical-statistical Methods

Author(s): Michaela Kavčáková / Language(s): English / Publication Year: 0

Keywords: financial health; financial distress prediction; Beaver´s test; Altman´s test; Quick test;

The main purpose of this paper is to evaluate financial health of companies in Slovakia through selected mathematical-statistical methods and to compare them. The data used in the analysis of this paper has been obtained from the Slovak internet portal Finstat and we have been analysing the data between 2013 and 2017. From each group of models used to evaluate the financial health of companies we have chosen one test to use them in this paper – Beaver´s test, Altman´s test and Quick test. These tests differ in the way they calculate financial health, so on that basis we can determine the differences between them and we can determine which type of test is most reflective of the real situation of companies. In our paper, we will use Beaver´s test, Altman´s test and Quick test to evaluate financial health of companies in Slovakia in the chosen industry from 2013 to 2017.

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Bitcoin as a Panacea for the Venezuelan Crisis

Author(s): Agata Kliber,Katarzyna Świerczyńska / Language(s): English / Publication Year: 0

Keywords: safe haven asset; Bitcoin; Venezuela; crisis; gold;

The aim of the article is to verify which asset: gold, oil or bitcoin can be considered a safe-haven in a crisis-driven Venezuela. Our study covers the period 01.05.2014-31.07.2018, as in August 2018 Venezuela changed its currency to Bolivar Soberano. We estimate a threshold vector autoregression model for the returns of all the above-specified assets, where the threshold variable was the return of Venezuelan Stock Exchange General Index (IBC). We allow for three regimes: the extreme upward movements of the index (the hype), the moderate behavior, and the extreme downward changes (the crisis). We verify whether the relationships between the three pairs of assets (IBC and gold, IBC and oil, IBC and bitcoin) change depending on the regime. We also assume that the error term from the regression model follows a GARCH model. Our results suggest that both gold and oil could have been considered a safe-haven asset in a crisis-driven Venezuela, as the instruments changed in the opposite direction to the IBC when the extreme downward movements of the index have been observed. Additionally, their volatility was much smaller and uncorrelated with the volatility of the IBC. Eventually, our results suggest that investing in bitcoin has been considered by the investors as an alternative to investment not only in the moments of the extreme changes of the index, but also in its “moderate” regime.

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FinTechs as Alternative Financial Market Players

Author(s): Monika Klimontowicz,Krystyna Mitręga-Niestrój / Language(s): English / Publication Year: 0

Keywords: FinTech; financial innovations; new technology; financial services;

The dynamic development of technology has resulted in changing customer needs, expectations and market behaviour. As a result bank and other financial entities were forced to change their product and distribution policy. Among external factors influencing banking market conditions, the dynamic development of nonbank technologyoriented service providers is thought to be one of the highest potentials to impact the market structure. This trend is also visible in Poland, where development of FinTech companies in different financial services market areas is noticable. The paper presents different approaches to the FinTech phenomenon. It shows the taxonomy of the FinTech companies and analysis the segments of financial markets which are characterised by low market entry barriers. The main aim of the article is to outline the Polish FinTech landscape – to characterise the FinTech market, showing main participants, drivers of development and challanges. The research method includes inductive and deductive methods, together with comparative analysis.

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Analysis of Consumption Tax Dependence on Beer consumption in the Czech Republic

Author(s): Eva Kolářová,Vendula Kolářová / Language(s): English / Publication Year: 0

Keywords: Tax Policy; Consumption Tax; Alcohol; Beer; Revenue;

The tax on alcohol falls under excise duties, which form part of the state budget. Alcohol is one of the most harmful psychotropic substances. There is probably no one in the Czech Republic who does not know beer. It's the most popular alcoholic beverage. The total amount of alcohol consumption is logically made by the consumption of each type of alcohol. Alcohol consumption in the Czech Republic is one of the largest in the EU according to the 2017 OECD results. It may also depend on the level of consumer income and the price of alcohol affected by the tax rate on alcoholic beverages. Furthermore, macroeconomic indicators such as unemployment, GDP growth and inflation may also affect consumption. The aim of our article is to determine whether the level of taxation will affect the reduction of beer consumption, whether the amount of wages will affect the amount of beer consumption, whether the ban on smoking in restaurants and public spaces will affect beer consumption.

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Does Gender Matter in the Performance of Family Firms? Evidence from the Czech Republic

Author(s): Daniela Kolouchová,Ondřej Machek,Aleš Kubíček / Language(s): English / Publication Year: 0

Keywords: family firms; gender; performance; women’s directorship;

This study aims to examine the effect of women’s presence in key management position on family company performance. On a sample of 343 observations of female-led firms and 2 668 observations of male-led Czech family firms from the period 2008-2013, we perform regression analysis and Student's t-test to find the differences in return on assets and its predictors. Women’s directorship is a statistically significant predictor of family business performance as measured by return on assets. Women who reach the top management positions in a family business perform better than their male counterparts, and family firms led by women use more debt and are smaller than family firms led by men. Female managers in family businesses are likely to contribute to their organization's current and future success, as well as to the success of their families. Supporting the advancement of women to higher positions and, at the same time, supporting family firms may be beneficial to society.

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Analysis of Migration Processes and Assessment of their Impact on the Development of International Money Transfers of Ukraine

Author(s): Irina Kolupaieva,Olena Shevchenko,Ivan Mytsenko,Alina Borysova / Language(s): English / Publication Year: 0

Keywords: migration policy; international money transfers; financial system; transmission; money transfer channel;

The main purpose of the research is to analyse migration processes of Ukraine and to determine the factors influencing the development of the market of international money transfers in Ukraine as a significant direction of strengthening the financial system of the country. According to the purpose, the dynamics of migration in Ukraine according to the geographical structure was analyzed, factors of influence on migration processes in Ukraine were determined. The impact of migration processes on the development of international money transfers was analyzed. Factors that affect the volumes of money transfers by official channels were determined. The estimation of factors according to the degree of influence and the dynamics of influence on money transfers was carried out. Measures to increase migrant remittances were identified.

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Regional Differences in the Relation of Flat Prices to Net Disposable Income of Households

Author(s): Lenka Komárková,Libor Votava,Jiří Dvořák / Language(s): English / Publication Year: 0

Keywords: real estate market; flat prices; household disposable income; panel data; regional analysis;

The residential real estate market (especially flats) is currently a very topical issue both from an economic as well as social point of view. Flat and house prices determine the economic burden in family finances and the availability of housing for households in regions. The paper aims to identify differences in the relation between flat prices and net disposable income of households among 14 regions in the Czech Republic based on the publicly available data from the period 2000 - 2017. To deal with the panel (longitudinal) data, a linear mixed model was used for the analysis. Twenty statistically significant differences from a total of 91 were identified. The results show that flat prices grow with increasing household disposable income faster in Prague as compared to other regions, except South Moravia. The results of our study can be helpful in the perspective of the regional economic policy or households’ decision makings about their living place or the family real estate investment.

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Foreign Trade in Central Europe: The Analysis of Openness

Author(s): Jaroslav Kovarnik,Eva Hamplova / Language(s): English / Publication Year: 0

Keywords: Central Europe; The Czech Republic; export; foreign trade; import;

The main topic of this article is the analysis of selected issues of foreign trade in the countries from central Europe, namely the Czech Republic, Poland, Slovakia, Hungary, Germany, and Austria. The Czech Republic, Poland, Slovakia, and Hungary are member states of so-called Visegrad Four, and they can be considered as developing countries, at least in comparison with other two analysed countries. Germany and Austria are not only strong and powerful countries, but they are also important business partners for all V4 countries. This article focuses on selected aspects of foreign trade development, because foreign trade is considered to be very important for successful and sustainable development of almost all countries around the world. The article analyses development of foreign trade with goods and with services, where we have discovered relatively surprising results (the weakest country in terms of services has been Germany, where the country with highest net balance has been Poland). Consequently, the article analyses the dependency of analysed countries on foreign trade. Several indicators can be used for this analysis, where the authors have been used export on GDP ratio, import on GDP ratio, and turnover on GDP ratio. From theoretical point of view, strong and large economies should be less dependent on foreign trade, where weak and small countries should be more dependent. This fact has been proved, but on the other hand, although small and relatively weak countries are more dependent on foreign trade, the final benefit of net balance on GDP is relatively low, which is relatively surprising fact again.

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