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Microeconomics of tourism among selected CEE countries: What influences profitability in a case of those profitable firms?

Tomáš Heryán ()
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Tomáš Heryán: Department of Finance and Accounting, School of Business Administration, Silesian University

No 62, Working Papers from Silesian University, School of Business Administration

Abstract: The paper has focused on financial management of medium-sized hotels and travel agencies in eight selected Central and Eastern European (CEE) countries. According to a business finance theory, there should be inverse relation between liquidity and profitability of companies. In general, if managers decrease firm's liquidity through investing into the fixed assets they should increase firm's profitability, which is caused by possible higher earnings from those investments. The aim of the study is to estimate how is profitability of those profitable tourism companies affected by selected financial variables, and decide whether the business finance theory is valid also within tourism industry among selected CEE countries. Annual data from Amadeus, the international statistical database are obtained from 1,957 hotels and 785 travel agencies from Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia. General Methods of Moments (GMM) with panel data is used as the main estimation method for period from 2006 to 2015. However, results of the paper have shown that the business finance theory is not valid either within both types of tourism companies nor among all selected CEE countries. Furthermore, it is obvious that a conflict between managers of tourism companies and their owners should have been paid more attention. A creating of retained earnings within the stockholders' funds when owners had reinvested the earnings back to the business had particular significance for tourism companies' profitability within the period affected by the global financial crisis, even in the case of those profitable companies.

Keywords: CEE countries; tourism; financial management; cash conversion cycle; stockholders' funds (search for similar items in EconPapers)
JEL-codes: C50 D20 Z33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-tra and nep-tur
Date: 2018-12-04
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