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Optimizing Risk Structure in Connection with the Corporate Life Cycle and Sector Cyclicity

Author

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  • Zdeněk Konečný

    (Department of Economics, Faculty of Business and Management, Brno University of Technology, Antonínská 548/1, 601 90 Brno, Czech Republic)

  • Marek Zinecker

    (Department of Economics, Faculty of Business and Management, Brno University of Technology, Antonínská 548/1, 601 90 Brno, Czech Republic)

Abstract

Entrepreneurial activities and thus also investments are connected with two kinds of risks, namely with the operational and financial risk. Both of them are dependent especially on the corporate life cycle and on the sector sensitivity to the economic cycle. The main aim of this article is to propose a methodology supporting managers and investors when estimating the shares of operational and financial risks in the entrepreneurial risk with taking into account the corporate life cycle and the sector sensitivity to the economic cycle. This methodology is subsequently applied in a selected company in the form of a case study and thus their results prove its practical applicability for both financial managers and potential investors as decision makers. This study relies on both secondary and primary data that were collected using databases and a semi-structured questionnaire. The data were processed by using descriptive statistical methods and a case study. The proposed methodology considers the actual phase of the corporate life cycle and the degree of sector sensitivity to the economic cycle. Determining the risk structure should simplify the risk management and subsequently raise the capital access. The methodology also contributes to investment decision-making, because the investors can assess investments with regard to their risk profile.

Suggested Citation

  • Zdeněk Konečný & Marek Zinecker, 2016. "Optimizing Risk Structure in Connection with the Corporate Life Cycle and Sector Cyclicity," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(3), pages 949-959.
    • Handle: RePEc:mup:actaun:actaun_2016064030949
    DOI: 10.11118/actaun201664030949
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    References listed on IDEAS

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    1. Zdeněk Konečný & Marek Zinecker, 2015. "Using the Boston Matrix at Identification of the Corporate Life Cycle Stage," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(1), pages 235-243.
    2. Ulf Nielsson, 2009. "Measuring and regulating extreme risk," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 17(2), pages 156-171, May.
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    Cited by:

    1. Anatoliy Tryhuba & Vitalij Boyarchuk & Inna Tryhuba & Oleh Boyarchuk & Oksana Ftoma, 2019. "Evaluation of Risk Value of Investors of Projects for the Creation of Crop Protection of Family Dairy Farms," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(5), pages 1357-1367.

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