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Analysis of Risk Factors Affecting Firms’ Financial Performance—Support for Managerial Decision-Making

Author

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  • Nicoleta Bărbuță-Mișu

    (Department of Business Administration, “Dunărea de Jos” University of Galati, 800008 Galati, Romania)

  • Mara Madaleno

    (GOVCOPP—Research Unit in Governance, Competitiveness and Public Policy, Department of Economics, Management, Industrial Engineering and Tourism (DEGEIT), University of Aveiro, 3810-193 Aveiro, Portugal)

  • Vasile Ilie

    (Department and Finance, The Bucharest University of Economic Studies, 010374 Bucharest, Romania)

Abstract

This paper aims to investigate how financial variables and exogenous crises influence firms’ financial performance, and how these factors may help managers in decision-making to increase their firm’s wealth. The dynamic interactions among variables were studied by applying a panel vector autoregressive model using annual data for a sample of non-financial firms from European countries. Results indicate that liquidity, leverage and productivity positively affect firm performance, while solvency and asset turnover are positive and statistically significant only in the case of return on equity. Labour productivity induces that firms tend to display larger efforts to keep financial performance in face of a crisis, considering that the crisis reveals a negative statistical impact over return on assets.

Suggested Citation

  • Nicoleta Bărbuță-Mișu & Mara Madaleno & Vasile Ilie, 2019. "Analysis of Risk Factors Affecting Firms’ Financial Performance—Support for Managerial Decision-Making," Sustainability, MDPI, vol. 11(18), pages 1-19, September.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:18:p:4838-:d:264151
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    3. Jarmila Horváthová & Martina Mokrišová & Mária Vrábliková, 2021. "Benchmarking—A Way of Finding Risk Factors in Business Performance," JRFM, MDPI, vol. 14(5), pages 1-17, May.

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