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Financial Performance in the Public Administration Sector: Comparison Between Hungary and Romania

Author

Listed:
  • Matei Tamasila

    (Politehnica University of Timisoara, Romania)

  • Ilie Mihai Taucean

    (Politehnica University of Timisoara, Romania)

  • Alin Emanuel Artene

    (Politehnica University of Timisoara, Romania)

  • Claudiu Tiberiu Albulescu

    (Politehnica University of Timisoara, Romania)

Abstract

We investigate the long-run relationship between profitability, liquidity and capitalization for companies acting in the public administration and defense sector from Hungary and Romania, using firm-level data for the period 2006–2015. Our panel cointegration analysis proves the existence of a long-run relationship between the analyzed variables. The DOLS results posit in the favor of a trade-off between liquidity and profitability for Hungary, but not for Romania. At the same time, the capitalization ratio negatively impacts the profitability ratio in Romania. These results are validated by a series of robustness tests, considering different profitability indicators, and partially validated by the FMOLS analysis. Our findings have noteworthy implications for the financial management of companies acting in the field of public administration and defense, showing different financial management strategies for the companies located in the two analyzed countries.

Suggested Citation

  • Matei Tamasila & Ilie Mihai Taucean & Alin Emanuel Artene & Claudiu Tiberiu Albulescu, 2018. "Financial Performance in the Public Administration Sector: Comparison Between Hungary and Romania," Management, University of Primorska, Faculty of Management Koper, vol. 13(3), pages 197-211.
    • Handle: RePEc:mgt:youmng:v:13:y:2018:i:3:p:197-211
    DOI: 10.26493/1854-4231.13.197-211
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    References listed on IDEAS

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