Acta Univ. Agric. Silvic. Mendelianae Brun. 2013, 61(7), 2183-2190 | DOI: 10.11118/actaun201361072183

Firm-specific factors and financial performance of firms in the Czech Republic

Pathirawasam Chandrapala1, Adriana Knápková2
1 Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka
2 Faculty of Management and Economics, Tomas Bata University in Zlin, Mostní 5139, 760 01 Zlín, Czech Republic

The objective of this study is to investigate the role of internal factors in generating financial performance of firms in the Czech Republic. The paper examines the impact of firm specific factors on company financial performance of 974 firms in the Czech Republic over the period 2005 to 2008, using data in the Albertina database. Pooled and panel cross-sectional time series techniques are used for the data analysis. Return on Assets (ROA) is the dependent variable of the model and eight firm specific factors are introduced as the explanatory variables. Using Return on Assets as the dependent variable, it is established that the firm size, sales growth and capital turnover are having significant positive impact on financial performance of firms. At the same time, debt ratio and inventory reflect significant negative impact on financial performance of firms. Overall explanatory powers of the two models are low and further research is necessary to increase the statistical power of the model. The results from the present study may be very encouraging and useful for managers as well as investors to plan investment and operational activities to achieve profitability objectives more efficiently and effectively. The findings have important managerial implications.

Keywords: financial performance, Czech Republic, return on assets (ROA), firm specific factors
Grants and funding:

The authors are thankful to the Operational Programme Education for Competitiveness co-funded by the European Social Fund (ESF) and national budget of the Czech Republic for the grant No. CZ.1.07/2.3.00/20.0147 - "Human Resources Development in the field of Measurement and Management of Companies, Clusters and Regions Performance", which provided financial support for this research.

Received: August 25, 2013; Published: December 24, 2013  Show citation

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Chandrapala, P., & Knápková, A. (2013). Firm-specific factors and financial performance of firms in the Czech Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 61(7), 2183-2190. doi: 10.11118/actaun201361072183
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