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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
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    References listed on IDEAS

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    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. Aleksandra Alicja Olejarz & Małgorzata Kędzior-Laskowska, 2024. "How Much Progress Have We Made towards Decarbonization? Policy Implications Based on the Demand for Electric Cars in Poland," Energies, MDPI, vol. 17(16), pages 1-28, August.
    9. 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.

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    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

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