IDEAS home Printed from https://ideas.repec.org/a/pes/ieroec/v13y2022i2p475-509.html
   My bibliography  Save this article

Stability of profits and earnings management in the transport sector of Visegrad countries

Author

Listed:
  • Tomas Kliestik

    (University of Zilina, Slovakia)

  • Alena Novak Sedlackova

    (University of Zilina, Slovakia)

  • Martin Bugaj

    (University of Zilina, Slovakia)

  • Andrej Novak

    (University of Zilina, Slovakia)

Abstract

Research background: Business profit and its stable development are key performance indicators. Many enterprises performed earnings manipulation, either upward or downward, according to the current business and macroeconomic situation, as well as time. These activities may interrupt the stationarity of time series. This article focuses on the transport enterprises, and the assessment of bonds in their earnings. Purpose of the article: The target of the article was to identify the occurrence of non-stationary and its unit root in the EBITDA of transport enterprises for each country in V4 during the period of 2010–2019. Methods: The stationarity and unit roots in time series were tested by the Kwiatkowski, Phillips, Schmidt, and Shin tests and the Augmented Dickey-Fuller based on the samples of 470 Slovak, 405 Czech, 774 Polish, and 1,056 Hungarian. The behavior of earnings manipulation (the first cause of non-stationarity) was indicated by the Modified Jones model. Additional causes for non-stationarity were confirmed by the regression analysis, including factors such as the GDP, unemployment rate, average monthly gross wage, and the Ease of doing business index. Findings & value added: The non-stationarity in the time series of EBITDA was disclosed for each country in the V4 region. Earnings management was discovered to be the cause of this erratic development. Thus, the value-added for the authorities and auditors is to show the association between non-stationary and creative accounting. In addition, purposeful downward manipulation in the transport sector occurs, not upward, which is typical in general. The methodology used in the study may be applied cross-sectorally in emerging countries. The labelling of specific macroeconomic variables depending on the country offers enterprises the opportunity to focus on factors with a crucial influence on their existence and activities.

Suggested Citation

  • Tomas Kliestik & Alena Novak Sedlackova & Martin Bugaj & Andrej Novak, 2022. "Stability of profits and earnings management in the transport sector of Visegrad countries," Oeconomia Copernicana, Institute of Economic Research, vol. 13(2), pages 475-509, June.
    • Handle: RePEc:pes:ieroec:v:13:y:2022:i:2:p:475-509
    DOI: 10.24136/oc.2022.015
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.24136/oc.2022.015
    Download Restriction: no
    File URL: https://libkey.io/10.24136/oc.2022.015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Manikas, Andrew S. & Kroes, James R. & Gattiker, Thomas F., 2019. "Misalignment between societal well-being and business profit maximization: The case of New York taxis drivers’ incentive system," Socio-Economic Planning Sciences, Elsevier, vol. 67(C), pages 1-8.
    2. Yousaf Ali & Claudio Socci & Rosita Pretaroli & Francesca Severini, 2018. "Economic and environmental impact of transport sector on Europe economy," Asia-Pacific Journal of Regional Science, Springer, vol. 2(2), pages 361-397, August.
    3. Luka Vukić & Davor Mikulić & Damira Keček, 2021. "The Impact of Transportation on the Croatian Economy: The Input–Output Approach," Economies, MDPI, vol. 9(1), pages 1-16, January.
    4. Roman Blazek & Pavol Durana & Katarina Valaskova, 2020. "Creative Accounting as an Apparatus for Reporting Profits in Agribusiness," JRFM, MDPI, vol. 13(11), pages 1-19, October.
    5. Jushan Bai & Serena Ng, 2005. "Tests for Skewness, Kurtosis, and Normality for Time Series Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 49-60, January.
    6. Sadaf Ehsan & Adeel Tariq & Mian Sajid Nazir & Malik Shahzad Shabbir & Rizwan Shabbir & Lydia Bares Lopez & Wasim Ullah, 2022. "Nexus between corporate social responsibility and earnings management: Sustainable or opportunistic," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(2), pages 478-495, March.
    7. Ali, Yousaf & Bilal, Muhammad & Sabir, Muhammad, 2021. "Impacts of transport strike on Pakistan economy: An inoperability Input-Output model (IIOM) approach," Research in Transportation Economics, Elsevier, vol. 90(C).
    8. Pavol Durana & Katarina Valaskova & Roman Blazek & Jozef Palo, 2022. "Metamorphoses of Earnings in the Transport Sector of the V4 Region," Mathematics, MDPI, vol. 10(8), pages 1-14, April.
    9. Elnahass, Marwa & Salama, Aly & Yusuf, Noora, 2022. "Earnings management and internal governance mechanisms: The role of religiosity," Research in International Business and Finance, Elsevier, vol. 59(C).
    10. Njoya, Eric Tchouamou & Nikitas, Alexandros, 2020. "The role of air transport in employment creation and inclusive growth in the Global South: The case of South Africa," Journal of Transport Geography, Elsevier, vol. 85(C).
    11. Katarina Valaskova & Tomas Kliestik & Dominika Gajdosikova, 2021. "Distinctive determinants of financial indebtedness: evidence from Slovak and Czech enterprises," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(3), pages 639-659, September.
    12. Jana Chovancova & Juraj Tej, 2020. "Decoupling economic growth from greenhouse gas emissions: the case of the energy sector in V4 countries," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 15(2), pages 235-251, June.
    13. Katarina Valaskova & Tomas Kliestik & Lucia Svabova & Peter Adamko, 2018. "Financial Risk Measurement and Prediction Modelling for Sustainable Development of Business Entities Using Regression Analysis," Sustainability, MDPI, vol. 10(7), pages 1-15, June.
    14. Michael P. Devereux, 2019. "How Should Business Profit Be Taxed? Some Thoughts on Conceptual Developments During the Lifetime of the IFS," Fiscal Studies, John Wiley & Sons, vol. 40(4), pages 591-619, December.
    15. Shafique, Muhammad & Azam, Anam & Rafiq, Muhammad & Luo, Xiaowei, 2021. "Investigating the nexus among transport, economic growth and environmental degradation: Evidence from panel ARDL approach," Transport Policy, Elsevier, vol. 109(C), pages 61-71.
    16. Rui Dias & Nuno Teixeira & Veronika Machova & Pedro Pardal & Jakub Horak & Marek Vochozka, 2020. "Random walks and market efficiency tests: evidence on US, Chinese and European capital markets within the context of the global Covid-19 pandemic," Oeconomia Copernicana, Institute of Economic Research, vol. 11(4), pages 585-608, December.
    17. Pavol Durana & Katarina Valaskova & Darina Chlebikova & Vladislav Krastev & Irina Atanasova, 2020. "Heads and Tails of Earnings Management: Quantitative Analysis in Emerging Countries," Risks, MDPI, vol. 8(2), pages 1-20, June.
    18. Svabova Lucia & Valaskova Katarina & Durana Pavol & Kliestik Tomas, 2020. "Dependency Analysis Between Various Profit Measures and Corporate Total Assets for Visegrad Group’s Business Entities," Organizacija, Sciendo, vol. 53(1), pages 80-90, February.
    19. Xie, Xinmei & Chang, Yu-Shan & Shiue, Min-Jeng, 2022. "Corporate life cycle, family firms, and earnings management: Evidence from Taiwan," Advances in accounting, Elsevier, vol. 56(C).
    20. Lucia Michalkova & Martin Cepel & Katarina Valaskova & Zuzana Vincurova, 2022. "Earnings Quality and Corporate Life Cycle Before the Crisis. A Study of Transport Companies Across Europe," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(61), pages 782-782, August.
    21. Janesh Sami, 2020. "Time Series Dynamics of Sugar Export Earnings in Fiji with Multiple Endogenous Structural Breaks: Implications for EU Sugar and Industry Reforms," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(1), pages 169-189, March.
    22. Pagach, Donald P. & Warr, Richard S., 2020. "Analysts versus time-series forecasts of quarterly earnings: A maintained hypothesis revisited," Advances in accounting, Elsevier, vol. 51(C).
    23. Hickman, L. Emily & Iyer, Subramanian Rama & Jadiyappa, Nemiraja, 2021. "The effect of voluntary and mandatory corporate social responsibility on earnings management: Evidence from India and the 2% rule," Emerging Markets Review, Elsevier, vol. 46(C).
    24. Ahmet Akca & Ethem Çanakoğlu, 2021. "Adaptive stochastic risk estimation of firm operating profit," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(3), pages 463-504, September.
    25. Tomasz Sosnowski, 2021. "The credibility of earnings announced by new stock companies: accrual and real earnings management," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(3), pages 661-677, September.
    26. Katarina Valaskova & Peter Adamko & Katarina Frajtova Michalikova & Jaroslav Macek, 2021. "Quo Vadis, earnings management? Analysis of manipulation determinants in Central European environment," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 631-669, September.
    27. Sattar Khan & Yasir Kamal, 2022. "Family business groups and earnings manipulation: An emerging economy perspective," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2017100-201, December.
    28. Adelajda Matuka & Shuffield Seyram Asafo, 2021. "Effects of Services on Economic Growth in Albania: An ARDL Approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(6), pages 856-881, August.
    29. Hewamalage, Hansika & Bergmeir, Christoph & Bandara, Kasun, 2021. "Recurrent Neural Networks for Time Series Forecasting: Current status and future directions," International Journal of Forecasting, Elsevier, vol. 37(1), pages 388-427.
    30. Jan Alexander Fischer & Philipp Pohl & Dietmar Ratz, 2020. "A machine learning approach to univariate time series forecasting of quarterly earnings," Review of Quantitative Finance and Accounting, Springer, vol. 55(4), pages 1163-1179, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kicová Eva & Poniščiaková Oľga & Gorzelanczyk Piotr, 2023. "Customer Requirements for Public Mass Transport During the COVID-19 Pandemic," LOGI – Scientific Journal on Transport and Logistics, Sciendo, vol. 14(1), pages 122-133, January.
    2. Maria Kovacova & Lenka Hrosova & Pavol Durana & Jakub Horak, 2022. "Earnings management model for Visegrad Group as an immanent part of creative accounting," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1143-1176, December.
    3. Rezart Demiraj & Suzan Dsouza & Mohammad Abiad, 2022. "Working Capital Management Impact on Profitability: Pre-Pandemic and Pandemic Evidence from the European Automotive Industry," Risks, MDPI, vol. 10(12), pages 1-21, December.
    4. Roman Blazek & Pavol Durana & Jakub Michulek, 2023. "Renaissance of Creative Accounting Due to the Pandemic: New Patterns Explored by Correspondence Analysis," Stats, MDPI, vol. 6(1), pages 1-20, March.
    5. Martin Bugaj & Pavol Durana & Roman Blazek & Jakub Horak, 2023. "Industry 4.0: Marvels in Profitability in the Transport Sector," Mathematics, MDPI, vol. 11(17), pages 1-23, August.
    6. Dominika Gajdosikova & Katarina Valaskova & Tomas Kliestik & Maria Kovacova, 2023. "Research on Corporate Indebtedness Determinants: A Case Study of Visegrad Group Countries," Mathematics, MDPI, vol. 11(2), pages 1-30, January.
    7. Miloš Poliak & Ján Dvorský & Jan Zýka & Elvira Nica, 2023. "Evaluation of a Front Braking Light for Improving Safety in Road Transport," Mathematics, MDPI, vol. 11(14), pages 1-15, July.
    8. Amélia Ferreira da Silva & José Henrique Brito & Mariline Lourenço & José Manuel Pereira, 2023. "Sustainability of Transport Sector Companies: Bankruptcy Prediction Based on Artificial Intelligence," Sustainability, MDPI, vol. 15(23), pages 1-13, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roman Blazek & Pavol Durana & Jakub Michulek, 2023. "Renaissance of Creative Accounting Due to the Pandemic: New Patterns Explored by Correspondence Analysis," Stats, MDPI, vol. 6(1), pages 1-20, March.
    2. Pavol Durana & Katarina Valaskova & Roman Blazek & Jozef Palo, 2022. "Metamorphoses of Earnings in the Transport Sector of the V4 Region," Mathematics, MDPI, vol. 10(8), pages 1-14, April.
    3. Martin Bugaj & Pavol Durana & Roman Blazek & Jakub Horak, 2023. "Industry 4.0: Marvels in Profitability in the Transport Sector," Mathematics, MDPI, vol. 11(17), pages 1-23, August.
    4. Vladan Pavlovic & Goranka Knezevic & Radica Bojicic, 2022. "The Impact of Gender and Age on Earnings Management Practices of Public Enterprises – A Case Study of Belgrade," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 130-148.
    5. Andriy Stavytskyy & Ganna Kharlamova & Olena Komendant & Jarosław Andrzejczak & Joanna Nakonieczny, 2021. "Methodology for Calculating the Energy Security Index of the State: Taking into Account Modern Megatrends," Energies, MDPI, vol. 14(12), pages 1-19, June.
    6. Katarina Valaskova & Dominika Gajdosikova & Jaroslav Belas, 2023. "Bankruptcy prediction in the post-pandemic period: A case study of Visegrad Group countries," Oeconomia Copernicana, Institute of Economic Research, vol. 14(1), pages 253-293, March.
    7. Nagy Marek & Valaskova Katarina, 2023. "An Analysis of the Financial Health of Companies Concerning the Business Environment of the V4 Countries," Folia Oeconomica Stetinensia, Sciendo, vol. 23(1), pages 170-193, June.
    8. Pavol Durana & Roman Blazek & Veronika Machova & Miroslav Krasnan, 2022. "The use of Beneish M-scores to reveal creative accounting: evidence from Slovakia," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(2), pages 481-510, June.
    9. Michał Bernard Pietrzak & Bartłomiej Igliński & Wojciech Kujawski & Paweł Iwański, 2021. "Energy Transition in Poland—Assessment of the Renewable Energy Sector," Energies, MDPI, vol. 14(8), pages 1-23, April.
    10. Ewa Chomać-Pierzecka & Andrzej Kokiel & Joanna Rogozińska-Mitrut & Anna Sobczak & Dariusz Soboń & Jacek Stasiak, 2022. "Hydropower in the Energy Market in Poland and the Baltic States in the Light of the Challenges of Sustainable Development-An Overview of the Current State and Development Potential," Energies, MDPI, vol. 15(19), pages 1-19, October.
    11. Javier Alejo & Antonio Galvao & Gabriel Montes-Rojas & Walter Sosa-Escudero, 2015. "Tests for normality in linear panel-data models," Stata Journal, StataCorp LP, vol. 15(3), pages 822-832, September.
    12. Panagiotelis, Anastasios & Smith, Michael, 2010. "Bayesian skew selection for multivariate models," Computational Statistics & Data Analysis, Elsevier, vol. 54(7), pages 1824-1839, July.
    13. Alain Guay, 2020. "Identification of Structural Vector Autoregressions Through Higher Unconditional Moments," Working Papers 20-19, Chair in macroeconomics and forecasting, University of Quebec in Montreal's School of Management.
    14. Manish Bansal, 2024. "Unpacking the drivers of earnings management in CSR firms: influence of investor risk perception," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(1), pages 127-142, March.
    15. James Mitchell & Richard J. Smith & Martin R. Weale, 2013. "Efficient Aggregation Of Panel Qualitative Survey Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 580-603, June.
    16. Mutschler, Willi, 2018. "Higher-order statistics for DSGE models," Econometrics and Statistics, Elsevier, vol. 6(C), pages 44-56.
    17. Aleksandra Matuszewska-Janica & Dorota Żebrowska-Suchodolska & Urszula Ala-Karvia & Marta Hozer-Koćmiel, 2021. "Changes in Electricity Production from Renewable Energy Sources in the European Union Countries in 2005–2019," Energies, MDPI, vol. 14(19), pages 1-27, October.
    18. Youssef Zizi & Mohamed Oudgou & Abdeslam El Moudden, 2020. "Determinants and Predictors of SMEs’ Financial Failure: A Logistic Regression Approach," Risks, MDPI, vol. 8(4), pages 1-21, October.
    19. Kohlbrecher, Britta & Merkl, Christian, 2022. "Business cycle asymmetries and the labor market," Journal of Macroeconomics, Elsevier, vol. 73(C).
    20. Zhao, Bing & Wu, Hao & Wang, Nuo, 2022. "Changing characteristics of the industrial correlation and economic contribution of air transport in China: An input–output analysis," Journal of Air Transport Management, Elsevier, vol. 104(C).

    More about this item

    Keywords

    business profit; earnings management; stationarity; transport sector; Visegrad Four;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pes:ieroec:v:13:y:2022:i:2:p:475-509. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adam P. Balcerzak (email available below). General contact details of provider: https://edirc.repec.org/data/ibgtopl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.