Corporate Negative Equity: The Evidence from the European Union

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dc.contributor.authorMokhova, Nataliacs
dc.contributor.authorZinecker, Marekcs
dc.coverage.issue3cs
dc.coverage.volume64cs
dc.date.issued2016-06-02cs
dc.description.abstractAfter the Global Financial Crisis the frequency of reported losses of companies has increased significantly in countries of the European Union. Moreover, the financial leverage of companies have increased and even exceeded 100% in several countries. The reason of this development is negative equity that companies find themselves to report. At first sight negative equities are caused by accumulated losses from prior periods. However, there are some other reasons that can result in increasing negative equities in companies. They remain adequate as long as a company is able to pay its bills. Nevertheless, a company with negative equity is exposed to risks. This paper investigates whether the corporate negative equity is a sign of the future failure of a company. We examine non-financial manufactured companies from selected countries of the European Union within the period 2005-2012 from database Amadeus (Czech Republic, Slovakia, Hungary, Poland and Germany). By the means of comparison between negative and positive equities we applied descriptive statistics and Pearson correlation analysis. We find that in all surveyed countries the size positively influences the equity of companies. Other factors as profitability and growth opportunities do not influence the corporate equity. In addition the binary logistic regression analysis has been conducted based on the evidence from Czech companies. Our results indicate that negative equities are not a sign of bankruptcy or insolvency of a company. But the low profitability or low business activities (that are predictors of bankruptcy) might lead to negative equities in the balance sheet.en
dc.formattextcs
dc.format.extent1021-1036cs
dc.format.mimetypeapplication/pdfcs
dc.identifier.citationActa Universitatis Agriculturae et Silviculturae Mendelianae Brunensis. 2016, vol. 64, issue 3, p. 1021-1036.en
dc.identifier.doi10.11118/actaun201664031021cs
dc.identifier.issn1211-8516cs
dc.identifier.orcid0000-0003-1764-0904cs
dc.identifier.other127313cs
dc.identifier.researcheridAAL-5760-2021cs
dc.identifier.scopus36976830900cs
dc.identifier.urihttp://hdl.handle.net/11012/70180
dc.language.isoencs
dc.publisherMendel University Presscs
dc.relation.ispartofActa Universitatis Agriculturae et Silviculturae Mendelianae Brunensiscs
dc.relation.urihttps://acta.mendelu.cz/64/3/1021/cs
dc.rightsCreative Commons Attribution-NonCommercial-NoDerivatives 4.0 Internationalcs
dc.rights.accessopenAccesscs
dc.rights.sherpahttp://www.sherpa.ac.uk/romeo/issn/1211-8516/cs
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/4.0/cs
dc.subjectbusiness cycleen
dc.subjectfinancial crisisen
dc.subjectcorporate economicsen
dc.subjectEuropean Unionen
dc.titleCorporate Negative Equity: The Evidence from the European Unionen
dc.type.driverarticleen
dc.type.statusPeer-revieweden
dc.type.versionpublishedVersionen
sync.item.dbidVAV-127313en
sync.item.dbtypeVAVen
sync.item.insts2025.02.03 15:43:11en
sync.item.modts2025.01.17 16:36:09en
thesis.grantorVysoké učení technické v Brně. Fakulta podnikatelská. Ústav ekonomikycs
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