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Creative Accounting in Eastern Europe: the Case of the Polish Port Companies

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  • Dariusz Bernacki
  • Carl Reyns

Abstract

During 1991, a large number of small companies was created to run the operational activity of the Polish seaports, which was until then monopolized by state-owned enterprises. The major part of the shares is held by the employees. Leasing-techniques are used to solve the problem of financing the infrastructure. Although the profit-margins are relatively modest, the return on total assets is rather important because the infrastructure does not appear on the assets-side of the privatized companies. As a consequence of what we call leasing-leverage, the return on equity reaches almost astronomic heights. In the conclusion we indicate the potential dangers of this situation; the financial construction does not solve the ownership-problem of the assets, can lead to only very short-term based decisions and does not guarantee continuity when the assets have to be replaced.

Suggested Citation

  • Dariusz Bernacki & Carl Reyns, 1998. "Creative Accounting in Eastern Europe: the Case of the Polish Port Companies," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 49-59, April - J.
    • Handle: RePEc:ers:journl:v:i:y:1998:i:2:p:49-59
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