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Holding Company and Its Performance

Author

Listed:
  • David Ficbauer

    (Department of Finance, Faculty of Business and Management, Brno University of Technology, Kolejní 2906/4, 612 00 Brno, Czech Republic)

  • Mária Režňáková

    (Department of Finance, Faculty of Business and Management, Brno University of Technology, Kolejní 2906/4, 612 00 Brno, Czech Republic)

Abstract

Research projects on the performance of companies search for the relationships between the methods of managing a company and the results. This paper presents a research on holding companies. The aim is to analyse the reasons for and purposes of holding companies being established and the advantages they may bring to the owners trying to find out whether the level of association between the companies influences their performance. The research was carried out in two stages. First a questionnaire enquiry was made with interviews and, subsequently, financial ratios were quantified and their correlation investigated with the extent of efficient cash flow management. The correlation was expressed by Spearman's rank coefficient. The benefits of creating a holding company were mostly found in the owners' investment risk diversification, reduction of the capital invested, and improved negotiating position of a holding company. Also, a correlation was determined between the method of cash flow management and financing strategy (measured by net working capital - the value of Spearman's coefficient is 0.761849 in average and by ratio debt to assets - the value of Spearman's coefficient is 0.813525 in average), liquidity of companies (measured by cash liquidity the value of Spearman's coefficient is -0.800436 in average) and performance (measured by return on assets - the value of Spearman's coefficient is 0.474 in average).

Suggested Citation

  • David Ficbauer & Mária Režňáková, 2014. "Holding Company and Its Performance," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 62(2), pages 329-337.
    • Handle: RePEc:mup:actaun:actaun_2014062020329
    DOI: 10.11118/actaun201462020329
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    References listed on IDEAS

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    Cited by:

    1. Režňáková Mária & Pěta Jan, 2016. "Efficiency of Mergers of Mechanical Engineering Companies in the Czech Republic," Review of Economic Perspectives, Sciendo, vol. 16(4), pages 361-374, December.

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