Efficiency versus value of joint-stock companies from agribusiness sector of the Warsaw Stock Exchange − a perspective towards trade-off decisions
2018
Zabolotny, S., Warsaw Univ. of Life Sciences (Poland). Dept. of Finance | Wasilewski, M., Warsaw Univ. of Life Sciences (Poland). Dept. of Finance
The article presents relations between the enterprise value, efficiency and capital structure of Polish joint-stock companies from agribusiness sector listed on the Warsaw Stock Exchange. The enterprise value of companies from WIG-FOOD sector was primarily subject to the market capitalization and debt fluctuations. A simultaneous decrease of the debt level and rise in cash resulted in a higher market capitalization due to a fading bankruptcy risk. A growth of earnings and profitability ratios had a positive impact on the market capitalization and enterprise value that was in line with theoretical assumption of value maximization principle. Considering the influence of profitability and debt level on the market capitalization it could be expected that managers would strive for reducing external sources of financing and increasing operating efficiency to maximize the value of their companies for shareholders.
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