Risk Structure Depending on the Corporate- and Market Life Cycle

kniha odborná

angličtina

This dissertation is focused on relations between corporate life cycle and the structure of entrepreneurial risk, that is measured by cost of equity. Besides the corporate life cycle there is considered also the market life cycle and consequently, there are, from the combination of phases, derived three different kinds of market positions, namely market pioneer, market driver and market follower. By the research, there is used the method of analyzing secondary data, gotten from the financial statements of selected companies and from the statistical and analytical materials by the Czech Ministry of Industry and Trade. There is chosen the sector of czech automotive industry because of its importance for the czech economy. The sample consists of 39 companies of all sizes, either companies limited by guarantee, or joint stock companies, acting on this market in years 2002-2010. Phases of the corporate- and market life cycle are identified by using the model by Reiners (2004). For measuring entrepreneurial risks, there is used the modified rating model INFA, which is called as the constructional model of the Czech Ministry of Industry and Trade. This model was originally developed for calculation cost of equity. The entrepreneurial risks are divided into two groups, namely into operational and financial risks, and all of the components of cost of equity are assigned to one of these two groups according to the risk, which is it related to. The results of the research prove, that there are only little differences in the structure of entrepreneurial risks depending on the corporate life cycle and the market position. In companies in the phases of growth and stabilisation dominate risk rewards to operational risks and within it the riskless rate and the risk reward to size of the company. Within risk rewards to financial risks, which can dominate only by companies in the phase of decline, is the risk reward to financial stability the most considerable component. The company in the position of market pioneer should focus on reducing the risk reward to financial structure, whilst by market follower can dominate the risk reward to entrepreneurial risk within rewards to financial risks.

cost of capital, operational risk, financial risk, corporate life cycle, market life cycle, market positions

KONEČNÝ, Z.

2014

27. 1. 2014

Scholars Press

Saarbrücken

978-3-639-70782-3

Risk Structure Depending on the Corporate- and Market Life Cycle

Business management

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