Abstract
This work aims to highlight the impact of Community funds on the capacity to create financial value of Portuguese companies. We develop a theoretical framework with a reflection on various topics relevant to research, namely the importance of investments for companies, the concepts of financial performance and the logic of value creation, the metrics for value creation and the cost of capital. In addition, we have looked at several studies with similar research objectives to observe the methodologies used and the research results achieved. The study we developed looked at the 166 companies that benefited from EU funds in 2014 under the Sistema de Incentivos a Inovacao, which is a part of the EU Incentives System for Research and Technological Development. To measure value creation capacity, we used EVA, since it is an indicator which allows you to easily measure the value created in each period and can be obtained directly from the financial statements of companies. The research results showed that the companies studied presented a greater capacity to create value, create employment and internationalize the activity in the financial year 2016 (although only job creation and internationalisation have shown statistically relevant differences). However, the statistical tests performed did not show any relationship among companies' best performance in the three indicators and the subsidies received, which means that, eventually, such positive developments have occurred due to other factors, such as the very favorable evolution of the Portuguese economy.
Highlights
Over the last few years business management has become quite complex, leading to constant risks in the business context resulting from economies’ globalization, by the frequent change in the organizations’ proprietary structure, and due to technological innovation and competitiveness in the global market
This work aimed to highlight the impact of Community European Union (EU) funds on the capacity to create financial value in Portuguese companies
We have developed a theoretical framework where we focus on several important topics for research, namely the importance of investments for companies, concepts of financial performance assessment, value creation logic, metrics to value creation and cost of capital
Summary
Over the last few years business management has become quite complex, leading to constant risks in the business context resulting from economies’ globalization, by the frequent change in the organizations’ proprietary structure, and due to technological innovation and competitiveness in the global market. The sum of all the factors referred to above, has substantially increased the level of risk in current or strategic management decisions taken within the scope of the organizations’ activity In this scenario, there has been a noteworthy concern about financial value creation, since it allows to verify companies’ capability to remunerate investors, both owners and financial institutions, considering the total cost of invested capital. Over the past few decades, Portuguese companies have benefited from EU funds that are supposedly allocated with the aim of strengthening their competitiveness and their capacity to create value in a business context increasingly complex and more subject to international competition. It is a very relevant theme for the Portuguese economy, few studies have been developed on the impact of these funds on national companies
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