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The Assessment of Financial Risks of Municipally Owned Public Utility Companies in Hungary Between 2009 and 2018

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  • Csaba Lentner
  • Laszlo Vasa
  • Szilard Hegedus

Abstract

he aim of this study is to assess the financial risks, as interpreted by us, of Hungarian corporations fully owned by municipalities across a national dimension after the global economic crisis broken out in 2008. In this study, financial risk was measured by profitability, liquidity and the equity ratio. We were seeking an answer to the question as to how more stringent state controls had influenced the companies’ ability to provide public services and their financial situation behind in a more robust public financial regulatory and control environment created in Hungary after 2010, that is, how the going concern principle of accounting had been implemented. Indirectly, we were also seeking an answer to the question as to how operational risks had been affected by the "breaking" effect on net income exerted by the administrative price regulation (reduction of utility costs on the consumers’ side) imposed on the services of public utility companies in 2013 (as part of the public finance reform introduced in 2010), that is, whether a more robust regulatory environment of public finances compelled the promotion of corporate efficiency.

Suggested Citation

  • Csaba Lentner & Laszlo Vasa & Szilard Hegedus, 2020. "The Assessment of Financial Risks of Municipally Owned Public Utility Companies in Hungary Between 2009 and 2018," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 16(4), pages 29-41.
    • Handle: RePEc:mje:mjejnl:v:16:y:2020:i:4:29-41
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    References listed on IDEAS

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    1. Asad Kausar & Clive Lennox, 2017. "Balance sheet conservatism and audit reporting conservatism," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 44(7-8), pages 897-924, July.
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    Cited by:

    1. Betgilu Oshora & Goshu Desalegn & Eva Gorgenyi-Hegyes & Maria Fekete-Farkas & Zoltan Zeman, 2021. "Determinants of Financial Inclusion in Small and Medium Enterprises: Evidence from Ethiopia," JRFM, MDPI, vol. 14(7), pages 1-19, June.
    2. Shahid Manzoor Shah & Amjad Ali, 2022. "A Survey on Financial Inclusion: Theoretical and Empirical Literature Review," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 310-330, December.

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