RISK AVERSION BEHAVIOR. RELATIONSHIPS BETWEEN RISK AVERSION, PRUDENCE AND CAUTIOUSNESS

This paper defines decreasing absolute risk aversion in purely behavioral termswithout any assumption of differentiability and shows that a strictly increasing and riskaverse utility function with decreasing absolute risk aversion is necessarily differentiable withan absolutely continuous derivative. A risk averse utility function has decreasing absolute riskaversion if and only if it has a decreasing absolute risk aversion density, and if and only if thecumulative absolute risk aversion function is increasing and concave. This leads to acharacterization of all such utility functions. Analogues of these results also hold forincreasing absolute and for increasing and decreasing relative risk aversion.risk aversion, prudence, cautiousness

THE ROLE OF STRATEGIC PLANNING IN MODERN ORGANIZATIONS

There is a very important relationship between strategic planning andperformance management. Performance management is really about setting andachieving goals at the employee level, and identifying and fixing barriers related toachieving those goals. But where do the goals come from? That's where strategicplanning comes in. Strategic planning (and also tactical planning), are methods acompany, and its individual work-units define their goals and objectives. In turn, thosegoals and objectives are used to determine and analyze the goals and objectives of eachemployee in a work unit. This is called cascading of goals. When done properly, settingemployee goals should rely on the goals of the particular work-unit, which gets its goalsfrom the planning done by the next bigger work unit, and so on. That's why the setting ofindividual goals and objectives should be done once the goals and objectives of the work-unit are established. No enterprise will be successful today without a solid, integratedstrategic plan driven by a clear vision and supported by a strong performancemanagement system.strategic planning, organization, performance management.

The state and the tax evasion

State is one of human construction, in need of resources for services offered, to finance the costs of public services available. Increasing the cost of services provided has the effect of increased taxation. Tax evasion is a condemnable act. It is not possible a combination of legal proceedings to obtain maximum benefits, but is reprehensible act, aware of the harm of others. Tax evasion have 2 facets: a lawful and an unlawful, or tax fraud. In our opinion, law does not allow evasion but rather helps the subject to tax in not reaching the area of tax evasion.tax evasion, tax system, Community Aquis, tax audit

THE IMPACT OF FINANCING POLICY ON THE COMPANY’S VALUE

National and international financial system offers companies a wide range of funding sources. The choice of one or more of the available sources and their combination are major aspects of the company's financing policy. Managers must keep in mind that the call to one or other of potential funding sources is not a minor and independent decision, but has profound implications on the company’s value. Weighted average cost of capital can be used as the discount rate or the selection of investment projects.financing policy, cost of capital, capital structure, company’s value

PUBLIC DEBT SUSTAINABILITY ANALYSIS: EU CASE

The global crisis has caused a serious fiscal deterioration that leaves the world economy with serious challenges. In many developed markets as well as in a few emerging markets (Emerging markets) public finances have already become, or are at least at risk of becoming, unsustainable. Commonly, public debt sustainability is defined as a sovereign's ability to service debt without large adjustments to public revenue and/or expenditure and without ever-increasing public-debt-to-GDP ratios. Hence, this definition refers to both a country\'s ability and willingness to repay its debt. We also have to add the fact that there isn`t an universal accepted definition of fiscal or debt sustainability. In light of the growing public debt, the issue of debt sustainability has increasingly attracted attention. In this paper we analyse public debt sustainability scenario in EU economies. At least half of the EU countries will have to implement stringent fiscal consolidation programmes over the next few years in order to prevent already high public-debt-to-GDP ratios from a further significant rise, also the case of Romania. However, drastic fiscal policy adjustment may be not feasible in the short term and hence public debt is likely to grow further. In some scenarios the public-debt-to-GDP ratio is predicted to soar to 133% in 2020, from just over 100% in 2010. By contrast, nearly all EM countries, including major economies, appear to be well positioned to stabilise or even outgrow their current debt ratios without drastic fiscal adjustment. Institutional improvements may help European countries to maintain fiscal credibility. In light of the future fiscal challenges, many European governments may introduce new or more effective national debt limits, similar to those put in place in the past with good results by some Emerging markets. Such institutional reforms could help to insulate fiscal policies from political pressure and to anchor financial market expectations.public debt, fiscal policy, fiscal sustainability, GDP, fiscal consolidation

Corporate strategies during the global crisis

The global downturn has hit many businesses as they were implementing global strategies to create, transfer and exploit competences across operations and locations world-wide. In an increasingly integrated world economy, multinational enterprises (MNEs) pursue opportunities for international growth, and thus manage global competition and develop strategies that create and exploit complementarities and linkages in the global net of their operations. Many conglomerates thus have in recent years accelerated their internationalization while simultaneously reducing their product diversification, a process known as “globalfocusing”. This process has been driven by shifts in barriers to entry across industries and countries due to the globalisation of markets, resources, supply chains and business models.global crisis, globalization, international growth

EMPIRICAL EXAMINATION OF THE CLASSICAL DIVIDEND POLICY THEORIES IN EU-28 COUNTRIES

Dividend policies and their impact on company value represent a subject which attracted strong academic interest, with many researchers bringing their contributions at solving the discussion based on the standard theory. The main objective of the paper is to revisit the classical dividend theories in the context of the EU-28 countries over a 9 year timeframe (2009-2017) which is an extension of previous studies on the topic over the same geographical zone. The motivation of the study is to identify those factors which determine the dividend decisions for the companies comprised in the sample we used and compare the results to the previous studies on the topic to see whether the classical theories still stand or there are shifts towards other factors.  The results of the paper show that the lifecycle theory of dividends together with the pecking order theory and the available cashflow theory are still standing, and that both the accounting and market performance of the company have a significant impact on the level of dividends paid by the company

PROFITABILITY - CAPITAL STRUCTURE TRADE OFF: CASE OF PUBLICLY ROMANIAN COMPANIES

There is an increasing number of empirical works that test what drives firm profitability, since it is an objective and at the same time a frame of how a company is performing. The main aim of this paper is to test capital structure, noncurrent assets ratio and tax rate as determinants for profitability, with capital structure as main focus. Using a sample of 62 publicly Romanian for period 2001-2011 and panel data model the results suggest that financial statement variables considered are significant in gauging profitability. It was concluded that there is evidence for pecking order theory and firms with large amounts of noncurrent assets are under performing

RISK AND FIRM VALUE IN EUROPEAN COMPANIES: A DYNAMIC PANEL DATA APPROACH

Recent uncertainties in financial markets and several company bankruptcies reinforce the relationship between risk and return as a cornerstone in corporate finance. Enterprise risk management theories offer unambiguous predictions about the relation between firm value and risk. The main aim of the paper is to provide new empirical evidence on the risk as a driver for company value creation process for European developed countries over the period 2001-2011. Using dynamic panel data model with two-step GMM-SYS method and enterprise multiple as a new approach to measure for firm value the results suggest that firm value is negatively related with risk, which is consistent with Bowman’s risk and return paradox. The negative relation between firm value and risk is robust through alternative measures, but it does not hold for companies from civil law countries. Additional control variables included in the model are significant and suggest that both growth and capital structure are negatively related with firm value

THE ANALYSIS OF THE RELATION COUNTRY RISK – MULTIPLE VALUE

Financial theory state that high expected growth, low risk in the company’s sector and low interest rates will push multiples higher. In this respect the goal of the empirical work is to examine country risk-multiple value relation, for the companies from emerging and frontier markets such as Central and East European ones. Specific control variables have been included in the model as proxy for growth opportunities, profitability, capital structure, and asset utilization. Using panel data analysis for period 2010-2015 as well as other financial variables for a sample of Central and East European countries during 2010-2015. The results partially support financial theories, mainly the significance of country risk and debt ratio and reject the growth opportunities hypothesis