An Exploratory Study of Financial Performance in CEE Countries


Our research investigates the performance of companies from Central and Eastern European (CEE) countries in the period after the Global Financial Crisis of 2007-2009 with the aim of identifying the driving factors behind accounting- and market-based performance. We include in the analysis companies from various industries in CEE countries that are European Union members and we study their performance between 2008-2016 over the following areas of performance:  liquidity,  solvency and indebtedness, operational profitability, global performance (through Return on assets and Return on equity), returns available to shareholders and market-based performance (through price/book value and Tobin Q ratio). Employing the hierarchical and non-hierarchical k-means cluster analysis companies are segmented into various homogeneous groups using various financial performance indicators as variables, Euclidian distances and the Ward amalgamation method. Furthermore, the resulting clusters have been grouped according to the country of origin and industry. Our findings show that specific groups of companies in these countries share common attributes, as evidenced by their performance indicators, which do not seem to be entirely based on their countries of origin and industry. Moreover, our exploration of CEE companies’ performance dynamics after 2008 evidences the increased competition in all industries particularly after 2009, as well as businesses’ need to adjust their activities after the losses incurred during the crisis period, but these phenomena is present with different intensities depending on country of origin and industry. At the same, we note the enhancement of global performance through improvements in the operational performance instead of financial leverage and indebtedness, which is a sound business approach by CEE companies.

Keywords: financial performance, Central and Eastern Europe (CEE), statistical cluster analysis, return to investors

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