Gyorgy Andor, Tamas Toth
Eotvos Lorand University, Budapest, Hungary, 1053 Egyetem tér 1–3. Budapest, Hungary
2nd International Scientific Conference – EMAN 2018 – Economics and Management: How to Cope With Disrupted Times, Ljubljana – Slovenia, March 22, 2018, CONFERENCE PROCEEDINGS published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia; Faculty of Management Koper, Slovenia; Doba Business School – Maribor, Slovenia; Integrated Business Faculty –  Skopje, Macedonia; Faculty of Management – Zajecar, Serbia, ISBN 978-86-80194-11-0


The research is about the relationship between progress in financial performance and firm characteristics – applied capital budgeting methods, presence of a code of ethics, firm size, extent of management ownership and presence of western management culture – of Central and Eastern European firms. Data of 218 non-listed companies are used from a survey in 2006 which focused on the capital budgeting practices and other firm characteristics of firms. The most important financial indicators are followed up reflecting these firms’ financial progresses – sales, profit before tax, net income, earnings before interest and taxes, total assets, equity, debt, return on equity, return on assets and number of employees – from 2005 to 2012.
Companies that do not use any kind of formal capital budgeting technique have significantly worse financial performance on average, while companies using the discounted cash flow (DCF) methods have the highest performance indicators. No significant difference in financial progresses between firms using only the accounting based (AB) or the DCF methods are found. Companies where DCF methods are frequently used, and simultaneously there is a code of ethics achieve the best financial performance. Our results provide a strong support for the theory of business ethics. Presence of a code of ethics seems to be a strong separation parameter: companies with code of ethics over-perform companies without it.

Key words

capital budgeting practice; code of ethics; size effect; management ownership; operation efficiency; financial performance; Central and Eastern Europe

Share this

Association of Economists and Managers of the Balkans – UdEkoM Balkan
179 Ustanicka St, 11000 Belgrade, Serbia

Udekom Balkans is a dynamic non-governmental and non-profit organization, established in 2014 with a mission to foster the growth of scientific knowledge within the Balkan region and beyond. Our primary objectives include advancing the fields of management and economics, as well as providing educational resources to our members and the wider public.

Who We Are: Our members include esteemed university professors from various scientific disciplines, postgraduate students, and experts from ministries, public administrations, private and public enterprises, multinational corporations, associations, and similar organizations.

Building Bridges Together: Over the course of nine years since our establishment, the Association of Economists and Managers of the Balkans has established impactful partnerships with more than 1,000 diverse institutions across the Balkan region and worldwide.

EMAN conference publications are licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.