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Merger Spin-off Project and Its Effect on Financial Health Of Post-Transformation Companies

Author

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  • Olga Heralová

    (CVUT Faculty of Civil Engineering, Department of Construction Management and Economics)

Abstract

The purpose of this article is to examine the impact of business transformation on the financial health of companies undergoing transformation, using bankruptcy indices. Business transformation could be the way to support risk diversification, improve production efficiency, financial performance or implement changes in organizational structure due to changed internal or external conditions. The verification of the financial health of the companies involved should be carried out and documented in order to ensure that no one has been harmed in connection with the transaction, due to the criminal liability of the legal representatives. This is usually done in advance. The advantage of this article is to point out that the verification by means of bank indicators is also suitable to be carried out after the transaction, immediately after and with a time lag, and could be part of the internal control process. A specific type of transformation, the spin-off by merger project, is the focus of this paper. This paper examines the financial health of companies operating in the Czech Republic using Altman's Z-score and IN05 bankruptcy indices. The main contribution of the article is the verification of the applicability of bankruptcy indicators for assessing the impact of the spin-off by merger project on the financial health of companies after transformation for the needs of documenting the actions of statutory directors and other decision makers with the due diligence of a proper manager.

Suggested Citation

  • Olga Heralová, 2024. "Merger Spin-off Project and Its Effect on Financial Health Of Post-Transformation Companies," International Journal of Economic Sciences, European Research Center, vol. 13(1), pages 1-12, May.
    • Handle: RePEc:aop:jijoes:v:13:y:2024:i:1:p:1-12
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    References listed on IDEAS

    as
    1. Michal Istok & Hussam Musa & Peter Kristofík & Lea Slampiakova, 2020. "Corporate Governance and the Impact of Transferring the Owners’ Registered Office to Tax Havens on the Future Financial Position of Slovak Companies," Springer Proceedings in Business and Economics, in: Nicholas Tsounis & Aspasia Vlachvei (ed.), Advances in Cross-Section Data Methods in Applied Economic Research, chapter 0, pages 147-158, Springer.
    2. Monika Bolek & Agata Gniadkowska-Szymańska, 2023. "Is the Growth of Companies Influencing Their Financial Condition Depending on Their Size: S&P 500 Listed Companies Example," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 30(2), pages 323-337, June.
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      More about this item

      Keywords

      Bankruptcy indexes; Merger spin-off project; Transformation;
      All these keywords.

      JEL classification:

      • G30 - Financial Economics - - Corporate Finance and Governance - - - General
      • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
      • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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