Analyzing Capital Structure across Industries: Evidence from Croatia

Capital structure refers to the delicate balance between equity and debt that a company uses to finance its assets. It is typically expressed as a debt-to-equity or debt-to-capital ratio, with the components usually located on the right side of the company’s balance sheet. Capital structure can exert great influence on the company’s risk profile and ability to leverage its operations. For this reason, the authors conducted an investigation of the capital structure of 16 joint stock companies listed on the Zagreb Stock Exchange comprising CROBEX, the equity index of Croatia for a three-year period starting in 2015 and ending in 2017. The study demonstrates that many CROBEX-listed companies are very risk averse and choose to remain debt-free. Some are, however, starting to discover the potential offered by financial leverage and have slowly started adjusting their capital structure. In conclusion, capital structure is slowly becoming an issue worthy of discussion on the corporate agendas in Croatia

UPRAVLJANJE RIZIKOM LIKVIDNOSTI: PRAKSA MEĐU HRVATSKIM TVRTKAMA

The main purpose of this paper is to explore the practice of liquidity risk management of Croatian business entities. The analysis is based on a survey of 62 business entities in Croatia. The authors investigate the existence of risk management and liquidity risk management measures among the surveyed business entities. The respondents’ knowledge of management, their use of indicators and methods for the management of liquidity risk, in addition to the cited reasons for implementation of liquidity risk measures were also subject to examination. Furthermore, the authors investigate the importance of liquidity management in business. The analysis reveals that Croatian business entities have neither sufficient knowledge regarding the majority of financial indicators, nor they tend to use liquidity management plans. Consequently, the survey’s findings indicate that the overall level of financial knowledge of Croatian managers is inadequate. This can, thus, be identified as one of the reasons for the traditionally high number of illiquid business entities in the market. Finally, this paper provides academia and policymakers with new revelations concerning the management of liquidity risk among business entities in Croatia.Glavna je svrha rada istražiti praksu u upravljanju rizikom likvidnosti hrvatskih poslovnih entiteta. Analiza se temelji na istraživanju 62 poslovna entiteta u Hrvatskoj. Autori istražuju postojanje mjera upravljanja rizikom i upravljanja rizikom likvidnosti među anketiranim poslovnim entitetima. Menadžersko znanje sudionika, njihova uporaba indikatora i metoda za upravljanje rizikom likvidnosti zajedno s citiranim razlozima za uporabu mjera rizika likvidnosti također su istražene. Nadalje, autori su istražili važnost upravljanja likvidnosti u poslu. Analiza otkriva da hrvatski poslovni entiteti imaju nedovoljno znanje o većini financijskih indikatora te ne koriste planove upravljanja likvidnosti. S obzirom na to rezultati istraživanja ukazuju na neprimjerenu ukupnu razinu financijskog znanja hrvatskih menadžera. Dakle, to može biti identificirano kao jedan od razloga za tradicionalno velik broj nelikvidnih poslovnih entiteta na tržištu. Konačno, rad daje akademskim djelatnicima i političarima nova saznanja u vezi s upravljanjem rizikom likvidnosti među poslovnim entitetima u Hrvatskoj

Adoption of Sustainable Accounting Practices Among Croatian SME’s

Small and medium-sized enterprises (SMEs) are of great importance to the Croatian economy. As recently as 2015, 99.7 percent of total registered companies in Croatia were SMEs, accounting for 54 percent of total revenues and collectively exhorting great impact on the society, the national economy, and the environment. Regarding socio-economic representation, they are the key players in achieving sustainability. Considering the fact that sustainability accounting plays a pivotal role in every economy, it is essential to understand how smaller business entities are taking actions on adopting sustainable practices and their corresponding sustainable accounting tasks. It is therefore the objective of this paper to analyze the current awareness, needs, and existing approach to sustainable accounting and reporting practices of SMEs in Croatia and identify the main knowledge gaps between the current and the optimal situation. For the purposes of this analysis, a survey was conducted on a sample of 42 respondents between February and March of 2018. The results show that the level of awareness among SMEs regarding socially responsible reporting is particularly low in Croatia, mostly due to the lack of SME’s field-related knowledge, skills, and experience, as well as the unfamiliarity with reporting advantages. Finally, this paper provides an overview of the lack of knowledge in order to identify the competence and skills needed to successfully implement non-financial reporting among small and medium enterprises. Keywords: sustainable accounting, SMEs, survey, Croati

IPOs Performance Analysis: Evidence from Emerging Markets in the Balkans

The main purpose of this paper is to investigate the performance of initial public offerings (IPOs) in the emerging markets with particular focus on the markets of Balkan countries. The paper provides analysis of long and short performance of IPOs. In the Balkan emerging markets IPOs are relatively rarely used. Although all observed Balkan countries have gone through processes of transition from planned economies to market economies in the past 25 years, just a few state-owned companies have been privatized by use of IPOs. Due to this specific nature of the companies the analyzed sample of IPOs is comprised of state-owned and non-state-owned companies. The results are interpreted and expounded accordingly, taking into consideration the aforementioned conjunction. The findings indicate that company characteristics, signalling variables and financial variables have influence on the IPOs short and long term performance. The paper provides academia and policymakers with new revelations concerning the IPO processes in Balkan emerging economies’ capital markets

Examining Financial Management Practices in the Context of Smart ICT Use: Recent Evidence from Croatian Entrepreneurs

Recent research demonstrates that entrepreneurs who learn contribute to lower failure rates of their startups. Nowhere is this more evident than in the area of financial management, where the entrepreneurs’ lack of skills and competencies – and their willingness to acquire them - can be a critical factor to the success of the business venture. The purpose of this paper is to examine the financial management practices among Croatian entrepreneurs in relation to budgeting, raising capital, cash flow management, and the use of ICT tools for enhanced efficiency of their businesses. The survey was conducted on a sample of 58 entrepreneurs whose answers provide valuable insight into their grasp of financial concepts in the context of smart ICT use. The ensuing analysis of the level of proficiency in combining smart tools with financial management reveals increased adoption of ICT practices for budgeting and purchasing among Croatian entrepreneurs. Additionally, the findings indicate that the entrepreneurs’ acquisition of skills and competencies for smart financial management presents a sound basis for increased overall financial sustainability of the startups