Acta Univ. Agric. Silvic. Mendelianae Brun. 2014, 62(2), 329-337 | DOI: 10.11118/actaun201462020329

Holding Company and Its Performance

David Ficbauer, Mária Režňáková
Department of Finance, Faculty of Business and Management, Brno University of Technology, Kolejní 2906/4, 612 00 Brno, Czech Republic

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).

Keywords: holding company, reasons for creating a holding company, diversification of business risk, performance of holding companies, net working capital, efficient cash management, indebtedness

Prepublished online: May 23, 2014; Published: February 1, 2014  Show citation

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Ficbauer, D., & Režňáková, M. (2014). Holding Company and Its Performance. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 62(2), 329-337. doi: 10.11118/actaun201462020329
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