IDEAS home Printed from https://ideas.repec.org/a/vrs/poicbe/v12y2018i1p349-362n31.html
   My bibliography  Save this article

The enterprise risk profile - a financial and managerial health indicator - comparative study

Author

Listed:
  • Duțescu Adriana
  • Stroie Cristina

    (The Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

The current paper explores the role that risk profile analysis plays in maintaining the financial and managerial health of companies, within the reorganization process (a phase of insolvency procedure). During the modern era, the attempts to regulate insolvency proceedings, in order to redefine the principles governing them, have made possible a strong international collaboration and have generated a set of reforms designed to effectively address the global phenomenon of insolvency. The main purpose of the new regulations is to give a second chance to the honest debtor and to support him and his/her business in their recovery efforts. Thus, the reorganization of companies becomes an essential attribute of the free, functional market economy, based upon free competition. EU-wide statistics for 2016 show that over 200,000 businesses are annually affected by bankruptcy, which leads to the loss of more than 1.7 million jobs each year. The situation is particularly important for the economies of all countries involved, regardless of the development level. Because of constant business threats, managers should be aware at all times of the economic and financial indicators, seeking for the vulnerable areas of their business and for those with development potential. Identifying a company’s risk profile involves analyzing all the risks that affect the entity (market risk, bankruptcy, liquidity risk, operational risk etc.). A very important factor concerning the reorganization of a company is the tax policy and this paper further explores the subject, by focusing on Romania‘s business patterns, compared to the international framework, based upon the statistics for reorganization procedures, the applicable legal framework, the creditors' policy to encourage recovery etc. The purpose of this study is to highlight the causes that might limit the recovery of companies, during the reorganization procedures in Romania and, as a further research, to analyze the opportunity of developing an economic risk analysis model able to predict the future reorganization of companies. It would represent a barometer of financial and managerial health.

Suggested Citation

  • Duțescu Adriana & Stroie Cristina, 2018. "The enterprise risk profile - a financial and managerial health indicator - comparative study," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 12(1), pages 349-362, May.
  • Handle: RePEc:vrs:poicbe:v:12:y:2018:i:1:p:349-362:n:31
    DOI: 10.2478/picbe-2018-0031
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/picbe-2018-0031
    Download Restriction: no

    File URL: https://libkey.io/10.2478/picbe-2018-0031?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. Xavier Giné & Inessa Love, 2010. "Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia," Journal of Law and Economics, University of Chicago Press, vol. 53(4), pages 833-864.
    2. Marioara Mirea & Cristina Stroie, 2016. "Concrete Aspects Regarding the Imputation of Current Tax Receivables in Insolvency Proceedings," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 554-558, February.
    3. Weiss, Lawrence A., 1990. "Bankruptcy resolution: Direct costs and violation of priority of claims," Journal of Financial Economics, Elsevier, vol. 27(2), pages 285-314, October.
    4. Vincent L. Barker Iii & Irene M. Duhaime, 1997. "Strategic Change In The Turnaround Process: Theory And Empirical Evidence," Strategic Management Journal, Wiley Blackwell, vol. 18(1), pages 13-38, January.
    5. LoPucki, Lynn M. & Doherty, Joseph W., 2002. "Why Are Delaware and New York Reorganizations Failing?," Berkeley Olin Program in Law & Economics, Working Paper Series qt81g9f6d8, Berkeley Olin Program in Law & Economics.
    Full references (including those not matched with items on IDEAS)

    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. Nicola Gennaioli & Stefano Rossi, 2010. "Judicial Discretion in Corporate Bankruptcy," Review of Financial Studies, Society for Financial Studies, vol. 23(11), pages 4078-4114, November.
    2. Randall A. Heron & Erik Lie & Kimberly J. Rodgers, 2009. "Financial Restructuring in Fresh‐Start Chapter 11 Reorganizations," Financial Management, Financial Management Association International, vol. 38(4), pages 727-745, December.
    3. Goodwin, John & Routledge, James, 2021. "Determinants of the duration of the voluntary administration process: An unconditional quantile regression analysis," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(3).
    4. Lynn M. LoPucki & Joseph W. Doherty, 2008. "Professional Overcharging in Large Bankruptcy Reorganization Cases," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 5(4), pages 983-1017, December.
    5. Stroie Cristina & Duţescu Adriana, 2019. "The Enterprise Risk Profile Model and Its Implementation in Reorganised Companies," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 13(1), pages 241-253, May.
    6. Anand Apte, 2014. "“Impact of Institutional Changes Felt by Faculty Members†: A Study with Reference to Management Institutes in Pune City," Jindal Journal of Business Research, , vol. 3(1-2), pages 1-13, June.
    7. Tedjo Soelaksono & Achmad Sudiro & Mintarti Rahayu & Sudjatno Sudjatno, 2018. "The Influence of Capability Managerial on Competitiveness of the Company through the Planning Strategy, Investment, Innovation and Performance of the Company (a Study on Corporate Manufacturing Indust," International Review of Management and Marketing, Econjournals, vol. 8(2), pages 22-32.
    8. Annabi, Amira & Breton, Michèle & François, Pascal, 2012. "Resolution of financial distress under Chapter 11," Journal of Economic Dynamics and Control, Elsevier, vol. 36(12), pages 1867-1887.
    9. Philippe Aghion & Oliver D. Hart & John Moore, 1994. "The Economics of Bankruptcy Reform," NBER Chapters, in: The Transition in Eastern Europe, Volume 2, Restructuring, pages 215-244, National Bureau of Economic Research, Inc.
    10. David Yechiam Aharon & Yossi Yagil, 2019. "The Impact of Financial Leverage on Shareholders’ Systematic Risk," Sustainability, MDPI, vol. 11(23), pages 1-23, November.
    11. Per Stromberg, "undated". "Conflicts of Interest and Market Illiquidity in Bankruptcy Auctions: Theory and Tests," CRSP working papers 459, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    12. Correia, Ricardo & Población, Javier, 2015. "A structural model with Explicit Distress," Journal of Banking & Finance, Elsevier, vol. 58(C), pages 112-130.
    13. Arturo Bris & Alan Schwartz & Ivo Welch, 2005. "Who Should Pay for Bankruptcy Costs?," The Journal of Legal Studies, University of Chicago Press, vol. 34(2), pages 295-341, June.
    14. Galai, Dan & Raviv, Alon & Wiener, Zvi, 2007. "Liquidation triggers and the valuation of equity and debt," Journal of Banking & Finance, Elsevier, vol. 31(12), pages 3604-3620, December.
    15. Hege, Ulrich, 2003. "Workouts, court-supervised reorganization and the choice between private and public debt," Journal of Corporate Finance, Elsevier, vol. 9(2), pages 233-269, March.
    16. Anderson, Ronald W. & Nyborg, Kjell G., 2011. "Financing and corporate growth under repeated moral hazard," Journal of Financial Intermediation, Elsevier, vol. 20(1), pages 1-24, January.
    17. Lucian Arye Bebchuk, 2002. "Ex Ante Costs of Violating Absolute Priority in Bankruptcy," Journal of Finance, American Finance Association, vol. 57(1), pages 445-460, February.
    18. Rodano, Giacomo & Serrano-Velarde, Nicolas & Tarantino, Emanuele, 2016. "Bankruptcy law and bank financing," Journal of Financial Economics, Elsevier, vol. 120(2), pages 363-382.
    19. James Routledge & David Morrison, 2012. "Insolvency administration as a strategic response to financial distress," Australian Journal of Management, Australian School of Business, vol. 37(3), pages 441-459, December.
    20. Monda, Barbara & Giorgino, Marco & Modolin, Ileana, 2013. "Rationales for Corporate Risk Management - A Critical Literature Review," MPRA Paper 45420, University Library of Munich, Germany.

    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:vrs:poicbe:v:12:y:2018:i:1:p:349-362:n:31. 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: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    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.