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Analysis of financial performance determinants: evidence from Slovak agricultural companies

Author

Listed:
  • Lehenchuk, Serhii
  • Raboshuk, Alina
  • Valinkevych, Nataliia
  • Polishchuk, Iryna
  • Khodakyvskyy, Volodymyr

Abstract

Purpose. The purpose of the present study is to examine the determinants of the financial performance of the Slovak agricultural companies. Methodology / approach. Bibliometric analysis was applied to analyze the literature, the results of the review were visualized using VOSviewer software. Panel data regression analysis, which was carried out using the GRETL software, was chosen to be the main research method for analyzing the influence of determinants on financial performance measures. 527 Slovak agricultural companies’ activity over the period 2015–2019 was chosen as the object of the study. The analysis is carried out based on the publicly available financial information (financial statements, management reports, official company websites) and information available in the “FinStat” database. Regression analysis was performed according to four developed models based on the use of four different dependent variables (Return on Assets (ROA), Net Profit Margin (NPM), Return on Equity (ROE), Return on Sales (ROS)) and 10 independent variables same for all the models (Leverage, Long-Term Debt to Assets, Short-Term Debt to Assets, Debt to Equity, Capital intensity, Tangibility of Assets, Current Ratio, Size, Dummy variable for type of ownership, Dummy variable for legal form). Fixed Effects Method was chosen as an estimate panel data parameter on the base of F-statistics test, Breusch-Pagan test, and Hausman test use. Results. The obtained results confirm the hypothesis about the existence of a distinctive impact of financial performance determinants due to the availability of the specific environment and features typical for the Slovak agricultural sector. None of the independent variables applied has a significant effect simultaneously on Models 1–4. We observed a negative significant impact at the 1 % level of l_Size on ROA and ROE of the Slovak agricultural companies. CapInt also has a negative significant impact on NPM and ROE. DtoE is found to have a positive impact on ROE. The complete lack of influence of AsTang in determining financial performance was revealed. The used dummy variables (DVTO, DVLF) were excluded from the composition of Models 1–4 during the regression analysis due to the availability of exact collinearity. Originality / scientific novelty. The uniqueness of the present study is that we identify the impact of the financial performance determinants specifically for the Slovak agricultural companies considering the specifics of the Slovak agricultural market in the context of the current problems in the sector of the economy being investigated. Practical value / implications. The obtained results can be used to improve the management decisions of the Slovak agricultural companies, to critically evaluate the state policy in the agricultural sector in the Slovak Republic, as well as clarify the recommendations given by various institutions to improve this sector of the economy.

Suggested Citation

  • Lehenchuk, Serhii & Raboshuk, Alina & Valinkevych, Nataliia & Polishchuk, Iryna & Khodakyvskyy, Volodymyr, 2022. "Analysis of financial performance determinants: evidence from Slovak agricultural companies," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(4), December.
    • Handle: RePEc:ags:areint:330351
    DOI: 10.22004/ag.econ.330351
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    References listed on IDEAS

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    1. Murat Ocak & Derya Fındık, 2019. "The Impact of Intangible Assets and Sub-Components of Intangible Assets on Sustainable Growth and Firm Value: Evidence from Turkish Listed Firms," Sustainability, MDPI, vol. 11(19), pages 1-23, September.
    2. Bulavinova, Natalia & Burdenko, Iryna & Lehenchuk, Serhii & Tsaruk, Iryna & Ostapchuk, Tetiana, 2021. "Trends in research of responsible investment in the context of sustainable development: bibliometric analysis," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 7(3), September.
    3. Roman Vavrek & Ivana Kravčáková Vozárová & Rastislav Kotulič, 2021. "Evaluating the Financial Health of Agricultural Enterprises in the Conditions of the Slovak Republic Using Bankruptcy Models," Agriculture, MDPI, vol. 11(3), pages 1-19, March.
    4. Novotná, Martina & Volek, Tomáš, 2015. "Efficiency of Production Factors and Financial Performance of Agricultural Enterprises," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 7(4), pages 1-9, December.
    5. Mihaela Brindusa Tudose & Silvia Avasilcai, 2020. "A Review of the Research on Financial Performance and Its Determinants," Springer Proceedings in Business and Economics, in: Gabriela Prostean & Juan José Lavios Villahoz & Laura Brancu & Gyula Bakacsi (ed.), Innovation in Sustainable Management and Entrepreneurship, chapter 0, pages 229-244, Springer.
    6. Samuel Kanga Odalo & George Achoki & Amos Njuguna, 2016. "Relating Company Size and Financial Performance in Agricultural Firms Listed in the Nairobi Securities Exchange in Kenya," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(9), pages 34-40, September.
    7. Ivana Kravčáková Vozárová & Rastislav Kotulič & Roman Vavrek, 2019. "Disparities in the financial performance of agricultural entities according to the legal form: the case of Slovakia," Applied Economics, Taylor & Francis Journals, vol. 51(56), pages 5999-6008, December.
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    Cited by:

    1. Mattia Iotti, 2023. "Financial evaluation and credit access of agricultural firms," Economia agro-alimentare, FrancoAngeli Editore, vol. 25(2), pages 31-67.
    2. Mattia Iotti & Giuseppe Bonazzi, 2023. "Financial Sustainability in Agri-Food Companies: The Case of Members of the PDO Parma Ham Consortium," Sustainability, MDPI, vol. 15(5), pages 1-31, February.
    3. Tyshchenko, Viktoriia & Achkasova, Svitlana & Karpova, Vlada & Kanyhin, Sergii, 2023. "Assesment the influence of debt capital on the bankruptcy of enterprises in the agricultural sector," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(2), June.
    4. Lehenchuk, Serhii & Raboshuk, Alina & Zhyhlei, Iryna & Zakharov, Dmytro & Fedoryshyna, Lidiia, 2023. "Financial performance determinants of Ukrainian agricultural companies in the pre-war period," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(4), December.
    5. Dmytriieva, Viktoriia & Sviatets, Yurii, 2023. "Agricultural business in independent Ukraine: thirty-year dynamics of the reorganization process," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(2), June.

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    Agricultural Finance; Financial Economics;

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