Natalja Lace

The influence of capital structure on baltic corporate performance

Seeking for the optimal capital structure lasts for more than 50 years and still is very topical, especially during the market turmoil as it happened in 2008. No perfect answer is yet provided to the question of how large debt amount should be kept on the accounts. The main objective of the present paper is to analyze the impact of capital structure decisions on the equity performance and on the profitability of the companies located in Baltics. The study covered the time period of 4 years (from 2007 till 2010) and the sample data of 36 “blue-chip” companies listed on the Baltic Stock exchanges. The results of the study discover positive relationship between stock performance and sufficiency of equity capital. Besides, there was found an inverse relationship between the level of debt and capital profitability confirming the pecking order theory that in the best case the company should use self-generated funds.

Commercial Banks Profitability Indicators: Empirical Evidence from Latvia

The aim of the present article is to determine the impact of the external and internal factors of bank performance eon the profitability indicators of the Latvian commercial banks in the period from 2006 to 2011. On the basis of research conducted abroad on bank and macroeconomic profitability indicators, in order to obtain research results the authors evaluated return on assets (ROA) and return on equity (ROE) indicators of the Latvian commercial banks. The authors conducted the survey of scientific literature and analyzed profitability indicators of commercial banks using descriptive methods, as well as SPSS data analysis methods, data correlation and regression analysis. On the basis of the obtained results, the authors have concluded that profitability has had a positive effect on operational efficiency, portfolio composition and management, while it has had a negative effect on the capital and credit risks, as measured according to ROA, while according to ROE, positive influence is exerted on composition of the capital portfolio and negative – on operational efficiency and credit risk. With regard to macroeconomic indicators, the authors have revealed that GDP has a positive impact on profitability as measured by ROA and ROE. The methodology used in the present research can be applied to determine not only profitability indicators of some commercial bank in particular, but also to compare performance indicators of several banks. Having conducted the present research, the authors have obtained empirical evidence on interrelationship between microeconomic and macroeconomic indicators and their effect on the profitability indicators of the Latvian commercial banks.

Does firm’s higher innovation potential lead to its superior financial performance? Case of CEE countries

AbstractInnovation is one of the most commonly used word in the business and academic world. Naturally the firms are willing to innovate to leverage on future profits and growth generated by the new products and supported by temporary monopolistic positions on the market. However, the question is about how much the companies should invest to record higher profitability. The authors tried to answer this question analyzing the companies within the Central and Eastern European region taking intangible assets as innovation proxy. It was concluded that the companies having higher investments in the intangible assets are able to generate higher margins. However, positive effect of possibly higher innovation potential is seen only if investments in intangibles are substantial, i.e. over 10%.

CSR Initiatives Introduction Status in Central and Eastern Europe and Their Importance for the Equity Investor

The chapter discusses and analyzes the implication status of the Corporate Social Responsibility (CSR) initiatives and their relevance to the stock investors in the emerging markets of Central and Eastern Europe (CEE). Three broad aspects are considered in the chapter: the corporate governance quality, earnings quality and ownership structure specifics. The research results suggest that all of the aforementioned CSR system components are relevant if considered in the context of the stock exchange: (1) well-managed companies are able to deliver superior returns in the long term; (2) poor earnings quality negatively influences market returns; (3) concentrated ownership appears to be the best ownership model suitable for CEE companies to offer higher long-term shareholder value.

How Do Inter-Institutional Teams Succeed? a Case of National Project

Abstract. Considering phenomenon of inter-institutional collaboration, the paper aims to investigate the issues of inter-institutional collaboration in Lithuanian public organizations. The paper is based on the study of collaboration aspects relevant to the project implemented by the Lithuanian Republic Ministry of Foreign Affairs. Based on theoretical discussion related to the success of project implementation and team work, two studies were conducted. Firstly, a sample comprised of seven project managers expressed the assumptions about decision-making process, obstacles of project implementation and measures for efficiency. Secondly, 65 responses were collected from project participants representing different public institutions. The results revealed that inter-institutional projects in public organizations are still characterized as following traditional and strictly hierarchic structure. The project leaders underestimate the potential of project group members and do not involve them into the decision-making process. The findings let us develop recommendations for managers and policy makers involved into inter-institutional projects.Keywords: inter-institutional collaboration, project, team work, success factors, decision making, leadershipJEL Classification: M1, M12, M19IntroductionInter-institutional collaboration has become an increasingly prevalent phenomenon in contemporary world. Some forms of collaboration have emerged in business and have gained popularity in particular industries such as: ship building (Ahola et al. 2008), film-making (Bechky 2006) and etc. Inter-institutional collaboration requires combining efforts of different organizations by implementing various projects in a limited time period. Hence, temporary nature of collaboration is a distinguished feature impacting interaction process. However, prevailing discussions revealed that inter-institutional collaboration is slow process and provides mixed results (Levering et al. 2013).Public organizations are confronted with the growing pressure to integrate and increase quality of services while lowering costs (Drach-Zahavy 2011). Corresponding to these pressures organizations aim to apply approaches prevailing in business field. Hence, inter-institutional projects have been gaining considerable attention of managers and policy makers in such fields as: health sector (Jones et al. 2004) and higher education (Tadaki, Tremewan 2013). Collaboration is mainly based on five pillars: prevailing common goals, reciprocal trust, and exchange of information, share of resources and capabilities and share of risks (Raisiene, 2011). The barriers to effective collaboration include mistrust, different priorities of organizations, different values and goals (Palinkas et al. 2014).Notably, collaboration of organizations requires considerable efforts of various teams. However, effectiveness of teamwork is seen as a challenge, impacted by increasingly complex and innovative tasks and environmental disruptions (Harvey et al. 2014). In addition, inter-organizational teams are confronted with even more complex problems than organizational teams. Collaboration issues in public sector arise due to traditional hierarchical command and control structures and the need to coordinate across organizational boundaries (Piercy et al. 2013). Hence, decision-making process becomes complex and impacts interaction of various stakeholders.The paper aims to investigate the issues of inter-institutional collaboration in Lithuanian public organizations. The paper is based on the study of collaboration aspects relevant to the project implemented by the Lithuanian Republic Ministry of Foreign Affairs (MFA) in 20122013. The research is grounded on the survey of 84 project participants representing different public institutions and interviews of project managers.The remaining of paper is organized as follows. The first part provides insights into the success of project implementation. …

Defining Key Factors to Sustain Maximum Shareholder Value

Frequent accounting frauds, research and development cost cuts, agency problem – these factors tend to lead to short-term gains, while providing eroded long-term performance to equity investors. The present study looks into the conflict between the short-term and longterm return to understand which factors can provide sustainable long-term return. Based on the content analysis of the academic literature, contemporary scientific publications and mission statements of the public companies, the authors propose hypothetical model of sustainable shareholder value. According to the model, the key elements, which achieve maximum long-term return of the company, are plausible corporate governance structure, high earnings quality, high innovative potential and optimal capital structure to ensure low cost of capital.

Understanding entrepreneurship development in Latvia: a cross-disciplinary approach

This paper analyses economic and educational challenges on the way of understanding and formation of entrepreneurship in Latvia in its almost 20-year long post socialistic period. Along with the state support programmes for small business development, entrepreneurship as a new concept is researched integrating as well the world experience in this field. It is shown that entrepreneurship is a dynamic system of the components determined in mixed methods research. The elaborated holistic functional-structural model of entrepreneurship illustrates that entrepreneurship can be developed holistically as a system when students identify, generate and realise opportunities into new personal, social or economic values not only in the context of specialised entrepreneurial disciplines, but within a wide range of disciplines in the unity of theory and practice.