Livia Ilie

Leveraging and Deleveraging: Pluses and Minuses

Abstract As in physics, leverage is an amplifier. In business, the leverage is amplifying the losses or the gains. In good times, leverage is good, it is busting the gains, it supports economic growth. Companies and governments are using leverage at large scale. In bad times, it is busting the losses. Companies and governments will have to deleverage. This paper aims to present in brief the concepts of leveraging and deleveraging, to explain why companies, banks and governments are using the leverage, and what are the consequences of using it? The high degree of leverage is one cause of a financial crisis and therefore deleveraging is usually following a financial crisis. We will address the issues of leverage and deleverage both on micro and macro level. Deleveraging entails not only risks, but also opportunities, notably the chance to strengthen financial stability. The opportunities at both macro and micro levels are more likely to materialize if the deleveraging process unfolds in an orderly manner and not in the context of increased stress and risk aversion.

Challenges for Financial Managers in a Changing Economic Environment

Abstract The fast changes and challenges that took place in the economic environment in the last years broadened the role of financial managers. If their basic responsibilities were linked mainly to financial reporting, financial planning, capital budgeting, capital structure, nowadays a stronger strategic dimension defines the role of financial managers. In addition, an important role is given to the financial manager in communicating professionally not only to the investors but also to the board. The aim of this paper is to give an overview of the challenges that the current economic context is bringing to the finance function and to present how the role of the financial managers is changing alongside with a transformation of the finance function.

Intellectual Property Rights: An Economic Approach

Abstract This paper aims to analyse the intellectual property rights from an economic perspective. The paper is discussing the points of view of well known economists in relation to the positive and negative impacts of the intellectual property systems. It brings also into discussion the role of IPR as a barrier to entry and a mean to restrict competition and to favour monopoly situations.

Sustainable Growth Rate: An Analysis Regarding the Most Traded Companies on the Bucharest Stock Exchange

The concept of sustainable growth rate was originally developed by Robert C. Higgins. In the case of companies with given stable financial policies, it is considered to be the link between growth-return rate combinations that gives a balanced growth line. This indicates the possibilities for a company to grow without generating deficits or cash surpluses. Increased sales require more assets, which can be financed by new debt, external equity, and internal equity through retained earnings. The sustainable growth rate is the maximum rate at which company sales can increase without decreasing its financial resources. The aim of this paper is to determine if the last year most traded companies on the Bucharest Stock Exchange (BSE) have registered growth and if it was a sustainable one. Our research is based on two hypotheses: (1) the analyzed companies have a constant growth and the growth is sustainable and (2) the main factor that is influencing SGR is the retention rate. The results are only partially validating these hypotheses.