Hungarian Companies Research Articles

Global Crises and Corporate Reorganisation Methods

Despite many regulatory changes there are still no sound reorganisation possibilities for financially distressed companies in Hungary. The current crisis of 2020 due to the pandemic is going to trigger mass liquidations especially there where the bankruptcy rules are ineffective. There is no efficient risk and resource allocation if there is no reasoning and the financial and economic criteria necessary for a proper bankruptcy management are not taken into consideration in the reorganisation procedure. This article is based on primary research conducted in 2014 and a further analysis of the problem published in the Eurasian Studies in Business and Economics in 2020 (Pálinkó and Pétervári, 2020). The conclusion is that the financial variables are seemingly irrelevant in decision-making. The bankruptcy procedure has become a useful tactic for the owner-management to keep their position and protected status for as long as possible even at the expense of the divergent creditors. There is a genuine need for a different model in Hungary, one in which financially rational decisions are not dysfunctional. We have found that time is the most important factor here. It is therefore suggested that the rules should be designed so that the companies be motivated to file for bankruptcy in time. This design is the automated mandatory auction bankruptcy procedure or its pre-pack version.

The firm-specific and macroeconomic determinants of the financial structure of construction companies in selected European countries

Abstract This research builds on previous studies in the field of financial structure and develops knowledge for the construction industry in eight selected countries in Central and Eastern Europe – Visegrád Group, Austria, Bulgaria, Slovenia, and Romania. The aim of the research is to examine the influence of profitability, asset structure, the GDP growth rate and the reference interest rate on the level of total, long-term and short-term debt of companies. The research period is from 2009 to 2018. The main conclusion of the research is the finding that the amount of debt of selected construction companies is most affected by the determinants of the external environment – the development of the economy and the reference interest rate. This conclusion applies regardless of the size of the companies. The direction of the resulting impact differs, as each of the economies underwent a different economic development during the period under review. The interest rate negatively affected the amount of debt of Polish, Romanian and Hungarian companies, given the higher interest rates in these economies; the remaining companies have a positive impact. The impact of the GDP growth rate on the amount of debt is mainly negative for Romanian companies regardless of size, medium-sized Polish and Austrian companies, and large Czech companies; a positive effect was found for the remaining companies. Economies have grown for most of the period under review, and negative impacts may mean taking advantage of profits, which usually grow during periods of prosperity and are a cheap source of funding. This does not necessarily mean economic problems and, as a result, declining debt due to the unavailability of debt financing.

Intuitive decision-making and firm performance

ABSTRACT Instead of a comprehensive analysis, company executives often listen to their intuitions or rely on their past experience; hence, intuition does play a critical role in management. In a sample of 234 Hungarian companies, we looked at the relationship between the decision-making approaches used and corporate performance and attitudes towards change. It turned out that decision-making based on past experience and intuitions are generally associated with better business results and better operational performance based on cost-effectiveness. In addition, we have seen evidence that companies that are more prepared for change and have greater capacity to manage change more effectively use an intuitive decision-making approach than those that are less responsive.

Corporate Social Responsibility and Customer Loyalty in Hungary

This study aims to investigate investigates the relationship between corporate social responsibility and customer loyalty in the presence of controlling factors, namely, customer trust and corporate image. A study questionnaire was distributed to a random sample of telecom company customers in three telecom companies in Hungary – (Magyar Telkom, Telenor, and Vodafone). Also,(700)Seven hundred paper and electronic questionnaires were distributed to the clients customers of these three companies. A total of (498) questionnaires were retrieved, with fora recovery rate of 71.1%. The study used descriptive statistics and multiple regression test data to draw conclusions. The study findings suggest that there is a relationship between corporate social responsibility and customer loyalty, in addition to the existence of and a relationship between corporate social responsibility, customer trust, and corporate Image.

An Unused Opportunity: The Activity of National Asset Managing Shared Company in Hungary

The main purpose of the paper was to analyse the effect of a specific governmental programme using the different statistical levels and hierarchical classes, to identify the main focus, of spending public sources (Home Protection Action Plan). The paper suggest, that the settlement hierarchical focus of National Asset Managing Shared Company (NET) turned to small and medium sized towns. The spatial focus of NET followed the economic and social crisis regions (on NUTS2 and 3 levels) quite well, these units concentrated a high number of bought flats/houses and high level of NET’s investments. The activity of NET in the late crisis period (2013-2015) played crucial role in stabilising the activity of housing markets in villages and small towns in the Eastern regions. The NET bought appr. 36.000 appartments, family houses and all these stock went under direct state ownership. The former owners used their flats s renters, with a highly reduced fee. This legal form offered an opportunity to began redirecting the very weak social rental housing sector in Hungary, which became marginal after the mass privatisation of flats in the 1990s. As we try to point out, this unique opportunity was missed by the national government, when after a few years of global fiscal crisis the dominant share of these flats were offered to rebuy by the former owners. This decision strengthen the ownership based housing regime in Hungary and make the housing affordability much difficult for the younger generation a poorer families.

Transition of Hungarian Companies to IFRS-based Reporting in Relation to Indicators Used in Credit Approval

Legal requirements and opportunities are prompting more and more Hungarian companies to prepare their financial statements in accordance with International Financial Reporting Standards (IFRS). In our study, we examine the impact of transition using typical indicators that are frequently included in financial institutions’ rating criteria. We compared the balance sheet, P/L account and cash flow data of 42 companies operating in different industries, as reported in their statements prepared in accordance with Hungarian and international regulations, and concluded that although there may be significant variations at an individual level, this is not the case in terms of the median of the aggregate data. Although the introduction of the European Single Electronic Format (ESEF), which allows for uniform interpretation and automatic processing of financial statements, has also been postponed for one year in Hungary due to the pandemic, it will open new perspectives for the development of rating systems, requiring preparations by credit institutions.

Održivo finansiranje - stvarno mađarsko zakonodavstvo u okviru EU

In this paper, after a systematic presentation of the theoretical background of the European Union regulation, we examine the Hungarian regulation and legal practice (using the websites of five listed Hungarian companies and the Budapest Stock Exchange Corporate Governance Recommendations) in connection with the identification of shareholders by the company, the verifiability of the exercise of shareholder's rights, the remuneration policy and reporting of the public company limited by shares and the approval of legal transactions concluded with related party. We also focus on financial governance and certain viewpoints of product governance, with special attention to product approval process and the issue of greenwashing. We chose to emphasize these issues since one cannot find verbatim, translations of legal acts of European Union on these fields with respect to Hungarian legislation. The other reason is that there are available practical experiences in connection with them, therefore we reflect on different anomalies. Our aim is to highlight the need to transpose and implement a legal instrument with such wide-ranging implications as sustainable finance into a thoughtful and coherent set of rules that permeate the legal system.

Impact of Diversity Management on Employees’ Engagement: The Role of Organizational Trust and Job Insecurity

The frequent world changes raised by globalization, new technology development, and the increase in migration movements have generated an immensely diversified workforce. To face these challenges, managers started to seek the best strategies to effectively run this mixed environment and implement the leading diversity management policies for human resource management sustainability, which is also considered as very constructive in boosting employees’ performance, motivation, satisfaction, as well as their work engagement. Consistently, this paper examines the impact of service companies’ diversity management systems on employees’ engagement and the moderating role of organizational trust and job insecurity in that relationship. As we opted for a quantitative study, we managed a survey based on a questionnaire dedicated to 580 employees working in Hungarian companies, specializing in Marketing, Management consulting, IT, and logistics services, to effectively assess the hypothesis concluded from the literature review. With the use of structural equation modeling (SEM) as a data analysis tool, our findings reveal that diversity management has a positive significant effect on Employees’ engagement and that organizational trust and job insecurity truly and significantly mediate that association. Along with social exchange theory, our research contributes to affirming that by implementing proper diversity management practices and by ensuring a trustworthy environment and outstanding work conditions, managers are constructively able to assist their employees, raise their involvement, and minimize the level of job insecurities.

HRM PRACTICES ON FOREIGN-OWNED COMPANIES IN HUNGARY

This paper sought to answer the question of how best human resource practices can support organisations in the current phase of internationalisation while still maintaining the local standards of the hosting country? In attempting to answer this question, the paper studied the HRM practices of Foreign-Owned Companies and Hungary's Socioeconomic environment. The study revealed that the Hungarian cultural society was more independent, and power hierarchy was not entrenched in the organisational cultures, highly individualistic, masculine, intolerant towards taking risks, realistic, and culturally restrained. The paper concluded that the increased FDIs and multinational companies in Hungary posed a great challenge to employees' effective and efficient management while still maintaining the host country's local standards.

Role of Service Quality in Improving Customer Loyalty towards Telecom Companies in Hungary during the COVID-19 Pandemic

The telecommunication sector is one of the most rapidly growing sectors in the world. The COVID-19 pandemic has created an increased dependence of customers on telecommunications to continue their work and studies. The increased usage of internet and telecom services during the COVID-19 pandemic has brought many risks and challenges for the telecom companies to meet the requirements of the consumers. In this regard, it is crucial to understand the factors affecting customer loyalty towards telecom companies during the COVID-19 pandemic. This study is conducted to evaluate the effect of service quality, perception towards promotional packages, and customer delight on customer loyalty towards telecom companies in Hungary. The study also examined the mediating role of customer delight and perception towards promotional packages between service quality and customer loyalty. Another aim of the study is to compare the behavior of Hungarian customers and foreign customers living in Hungary towards telecom companies in the course of the COVID-19 pandemic. The study used a linear snowball sampling method and a well-structured questionnaire to collect the data. In total, 589 completed responses were used for analysis out, of which 208 responses are from Hungarian customers and 381 are from foreigners. To analyze the collected data, regression analysis was applied by using AMOS 22 package. The results of our study revealed that service quality and perception towards promotional packages positively influence customer loyalty among both Hungarian and foreign customers. On the other hand, customer delight significantly influences customer loyalty only among foreign customers. The results also proved the mediating role of promotional packages and customer delight between service quality and customer delight. This study will provide significant practical implications for managers of telecom companies in Hungary.

Hungarian Government on the Whitening of the Economy Measures to Stabilize the Budget

The Hungarian government developed a package of tools for improving legal control and compliance for Hungarian companies and entered into force between 2012 and 2021. Part of this complex package of measures sought to broaden the tax base without raising taxes, while others sought to reduce the size of the black economy by reducing the amount of illegally available benefits. The level of compliance may increase, as inspections are continuous, the risk of failure is high, and compliance with legal actions does not require a large intellectual or financial expense from the taxpayer. Part of this package was the obligation to use online cash registers, the introduction of reverse charge VAT, the targeted reduction of VAT rates, the introduction of an electronic goods tracking and verification system, and the introduction of online invoicing.

Impact of Perceived Organizational Support on OCB in the Time of COVID-19 Pandemic in Hungary: Employee Engagement and Affective Commitment as Mediators

The performance of the employees and productivity of each individual, in general, have been badly affected because of the COVID-19 pandemic. Organizational citizenship behavior is regarded as an interpretation of the performance of the employee which is essential to contribute more to the organization’s processes and success. Therefore, to increase the organizational effectiveness and achieve its goals, it is crucial to understand the factors affecting the organizational citizenship behavior of the employees. This study aims to examine the impact of perceived organizational support on organizational citizenship behavior with the mediating role of employee engagement and affective commitment. To collect the data for this study, a linear snowball sampling method was used, and 380 foreign employees working in different service companies in Hungary participated in the survey. Structural equation modeling (SEM) was used to test the proposed hypothesis. The results of the study revealed that perceived organizational support positively associated with organizational citizenship behavior and this relationship is also strongly mediated by employee engagement. On the other hand, employee engagement and affective commitment pose a direct positive influence on organizational citizenship behavior. This study has theoretical and practical implications as it will provide a comprehensive framework to better understand the factors influencing the organizational citizenship behavior of the employees.

Does the life cycle affect earnings management and bankruptcy?

Research background: Deteriorating economic conditions and a negative outlook increase the pressure on financial management and the need to show high financial performance. According to Positive Accounting Theory, the growing risk of bankruptcy is associated with the phenomenon of earnings management. Bankruptcy risk and the quality of reported profits, along with other aspects of financial performance, vary throughout the company's life cycle. Nevertheless, these factors or their interactions are investigated only to a very small extent.
 Purpose of the article: The aim of this study is to clarify the impact of corporate life cycle and bankruptcy on earnings management, in order to describe behaviour of companies at different stages of corporate life cycle.
 Methods: A hierarchical mixed model with a random time and industry effect was chosen as appropriate because it allows the investigation of multilevel data that is not independent. The sample covers the financial indicators of more than 33,000 Central European companies from 2015?2019. The non-sequential Dickinson model, company age, and three models of accrual earnings management were used as proxies for the company's life cycle and quality of reported profit.
 Findings & value added: Earnings management and bankruptcy risk have a U-shape, indicating that financially distressed firms reduce reported accounting profit at the Introduction, Decline and, to a lesser extent, at the Growth stage. Slovak and Czech companies manipulate profits to a similar extent, Hungarian companies increase accounting profit to a greatest extent than the surveyed countries by controlling bankruptcy ? life cycle effect; however, the variability of accounting manipulations across industries has not been demonstrated. These findings imply that start-ups and declining businesses provide crooked financial statements to obtain more favourable debt covenants, and estimating discretionary accruals using life-cycle subsamples can improve the predictive power of accrual earnings management models.

A kereskedelmi szektor felvásárlásainak hatása a csődkockázat mértékére és a hatékonyságra

THE AIMS OF THE PAPER We associate M&A transactions with increasing market share, improved operational efficiency, and the ability to create value, but several foreign studies have shown the failure of M&A transactions, including an increase in the risk of bankruptcy. Every year, a significant number of companies go bankrupt in Hungary, in the non-recession period, as well. The aim of our primary analysis is to examine, how the acquisitions made in Hungary between 2008 and 2016 affected the riskiness of companies, especially regard to their bankruptcy risk. Our secondary goal is connected to the identification of the change accompanied by the financial indicators. METHODOLOGY In our work, we examine the cases implemented in the commercial sector by companies subject to licensing by the Hungarian Competition Authority, ie with annual net sales of more than HUF 500 million. Apart from the “outlier” cases, we examine all the cases. The impact of the acquisition is analyzed with 3 bankruptcy models. MOST IMPORTANT RESULTS Regarding the non-financial characteristics of the transactions, we found that acquisitions typically take place between competitors, which presupposes strong market competition. This is also supported by the geographical position of the companies: in addition to Budapest, the examined transactions were characterized by companies based in the Great Plain. According to our financial results, the acquisition did not result in any efficiency gains in a significant number of companies, and there was no decrease in the risk of bankruptcy for the examined cases. RECOMMENDATIONS The results of our research carried out in Hungarian companies confirm the research published in the international literature, according to which M&A transactions fail in large numbers, adverse effects occur after the transaction: The results of our work may overshadow the well-known benefits and expectations of acquisitions. Based on all this, we recommend the companies planning mergers and acquisitions to take the possible failure of the acquisition into consideration.

An Irrigation Homogenity Assessment of a Variable Rate Sprinkler Irrigation

Abstract Nowadays, the development of irrigation is increasingly recognized as a necessary factor in agriculture, primarily because of global warming. Depending on the field conditions, the most commonly used method is sprinkler irrigation. The spray uniformity of sprinklers installed on the field irrigation equipment can be characterized by the Christiansen-uniformity coefficient (CUc%) and the distribution uniformity coefficient (DU%). Our investigations were carried out on the lateral moving irrigation equipment of University of Debrecen, Institutes for Agricultural Research and Educational Farm and Nyírbátor’s company in Hungary in 2019. Variable rate irrigation (VRI) is used in Nyírbátor. In contrast, the VRI has given positive results, making an irrigation equipment with the VRI a safer and more uniform method than a conventional linear irrigation equipment.

Analysis of Retailer and Corporate Payment Habits in Hungary

The study looks at the payment habits of retailers and companies in Hungary, especially the acceptance and share of electronic payments in 2019. In doing so, data from two questionnaire-based surveys and the online cash register database are analysed using statistical methods, decision trees and regressions. The results show that retailer payments are typically cash intensive, while credit transfer transactions dominate at companies. The factors with the largest impact on card acquiring and the share of cash at points of sale is sales revenue and the value of the purchase in the case of retailers, and the proportion of cash wage payments in the case of companies. Costs also play an important role in card acquiring, therefore instant payment, which provides cheaper electronic payment solutions, could be crucial when it comes to smaller retailers and companies offering electronic payments. Public policy measures could mainly target retailers and the micro and small enterprise segment.

Financial performance and market growth of the companies in Hungary and Romania: A study of the food retail companies

Currently, there is a growing concentration in terms of supermarkets and hypermarkets, discount stores, and wholesalers. The advancement of retail chains has accelerated and they now have significant market share. In the EU countries, food retail turnover is characterized by concentration, with more than 90% of turnover coming from retail chains. Therefore, in the present study, the choice was made to analyse the average indicators of the sector and to compare them with the indicators of the largest sales companies in addition to the financial data of the top 100 companies with the highest turnover both in Hungary and Romania. The article provides an insight into the economic, property, income and liquidity situation of Hungarian and Romanian companies, which are dominant in food retailing. It also describes the liabilities structure and asset composition of the companies surveyed in the two countries. It can be stated that the short-term liquidity of Romanian enterprises in the case of the liquidity ratio and the quick liquidity ratio lags behind the values experienced by Hungarian enterprises. The value of cash-level liquidity is similar to the values in Hungary, it is characterized by a low but increasing trend. Comparing the indicators of the examined Hungarian enterprise and the sector, it can be observed that in 2015, when the analysed companies showed a loss of profit, negative values can also be recorded in the case of the average profitability indicators of the sector. The article also covers future analysis possibilities and perspectives.

Accrual-Based Earnings Management: A Case Study in V4 Focusing on Mining And Quarrying Sector

The aim of the contribution is earnings management detection by using a model with the highest explanatory power, as well as verifying hypotheses about the existence of a statistically significant relationship between earnings management and country, as well as firm size within companies operating in the mining and quarrying sector in 2019 and 2018. Data were obtained from the Amadeus database. The sample contains 348 financial reports of companies from 2019 to 2017. Research is focused on V4 companies that have the sum of total assets higher than 2,000,000 EUR, as well as the sum of operating revenue is higher than 100,000 EUR. Three recommended models were used, namely the modified Jones model, Industry model, and Kothari model. The explanatory power of these models was tested by using several criteria. Based on the results, the modified Jones model was chosen for earnings management detection. According to the results, companies in the mining and quarrying sector in V4 use earnings management techniques to manage the profit. It is not possible to clearly determine in which direction they manage their profit more often. Different values were measured in the two observed periods. Based on the results, Czech and Slovak companies used earnings management techniques to increase their profit. On the other hand, Poland and Hungarian companies used earnings management techniques to decrease it. Very large as well as large companies used earnings management techniques to decrease their profit; medium-sized companies used earnings management techniques to increase it.

Digital technologies and the nature and routine intensity of work: Evidence from Hungarian manufacturing subsidiaries

This paper explores the impact of digital technologies on the nature and routine intensity of shopfloor work, the ways in which digital technologies exert their effects and the factors moderating the outcomes of digitalisation in respect of work. The effect of technology cannot be limited to a dichotomy of increasing versus decreasing degrees of routine. Instead, there are basic scenarios as far as the routine content of activities is concerned: a) no change in routine; b) increased routine; c) transformed routine; d) reduced routine. More specifically, drawing on data from Hungarian companies, we discuss the multiple ways that technology affects the nature and routineness of work. These include (i) workload and intensity of work; (ii) the degree to which tasks can be explicitly defined, measured and codified; (iii) task spectrum, i.e. the variability, complexity and diversity of work tasks; (iv) the composition and amount of skills required for task execution; (v) the importance of experience or tacit knowledge for task execution; and (vi) the value added of work tasks. Evidence indicates that the qualitative enrichment of shopfloor work and digital technology-induced reduction in the routine content of job tasks apply only to relatively skilled employees, albeit not exclusively in high-level shopfloor functions. It is argued that the beneficial effects of digital technologies materialise only if employees are skilled enough to be upskilled and become engaged not only in digitally-assisted but also in digitally-augmented, high-value activities.

A network analysis of cross-border mergers and acquisitions in Poland, Czechia and Hungary

Background: Cross-border mergers and acquisitions (CBM&As) have taken the form of a network, as there are complex business relationships between the participating entities. The concept of social network analysis (SNA) to study business connections is poorly described in the literature. There is also a lack of comprehensive structure studies on CBM&A purchases by Central and Eastern Europe (CEE) companies.
 Research purpose: The purpose is to evaluate the geographical and sectoral structure of the Polish, Czech, and Hungarian CBM&A network in 2010–2020. This article also aims to present a new methodological approach to studying the structure of the M&A market related to the application of SNA metrics.
 Methods: The study is carried out using social network analysis. Sectoral M&A data taken from the Eikon Refinitiv database are used, and several network indicators are applied, i.e., degree, prestige, and betweenness centrality, for the analysis.
 Conclusions: In 2010–2020, Polish, Czech, and Hungarian companies were characterized by investment activity not only in the CEE countries, but also in Western Europe, Russia, and the United States. Enterprises from the financials, industrials, consumer cyclicals, and technology sectors have played an important role in CBM&A networks. Entities operating in the energy and healthcare sectors (in Hungary) and the real estate and utilities sectors (in Czechia) have also occupied a central place in the analyzed networks. Private equity and hedge funds play a key role in cross-sectoral transactions.