Measuring the Impact of an Administrative Fine on a Company and Its Future Survival: a Case Study From The Czech Republic

• Autorzy: Tomas Krabec , Romana Čižinská
• Języki publikacji: EN

Abstrakty

EN

An administrative fine is a monetary penalty that may be imposed by a supervisory authoritity as an administrative punishment. Such a fine adversely interferes in the cash flow generation of the company in question. The fine can be described as an investment carrying opportunity costs with no economic returns. However, according to the judgment of the Constitutional Court of the Czech Republic Pl. ÚS 3/02 of 13 August 2002 it is submitted that the fine cannot be imposed in such an amount that would ultimately be liquidating for the sanctioned entrepreneur. The as-sessment of whether the specific amount of the fine imposed represents such an intensive inter-ference with the entrepreneur's property that his business activity becomes pointless (i.e., in the long run only for the payment of a fine) is elaborated in this article. Based on a case study from the Czech Republic, this article deals with an example of a suitable methodological procedure, on the basis of which it is possible to evaluate the impact of a specific amount of fine imposed on the property of a sanctioned entrepreneur and assess ex ante whether (i) continuity of his busi-ness will be interrupted in the future, i.e., when, as a result of the payment of the fine, he even-tually goes bankrupt in the form of insolvency or over-indebtedness and / or (ii) his business ac-tivity will only serve to pay the fine and thus become "pointless". The presented economic narra-tive and methodology are relevant for policy makers and, particularly, for supervisory authorities imposing the fines or assessing the requests for remission. (original abstract)

Słowa kluczowe

EN

Administrative penalty; Entrepreneur; Enterprises; Enterprise survival

PL

Kara administracyjna; Przedsiębiorca; Przedsiębiorstwo; Przetrwanie przedsiębiorstwa

• Czasopismo: e-Finanse
• Rocznik: 2021
• Tom: 17
• Numer: nr 4
• Strony: 34--49

Twórcy

autor

Tomas Krabec

• ŠKODA AUTO University, Czech Republic

autor

Romana Čižinská

• ŠKODA AUTO University, Czech Republic

Bibliografia

• Aryasri, A.R. (2020). Business Economics and Financial Analysis. McGraw-Hill Education.
• Cizinska, R. (2018): Zàklady Finanćn Honzen Podniku. Prague: Grada.
• Cizinska, R., Krabec, T. (2021): Ekonomické Posouzenido Paduudëlené Penëzité Pokuty Na Podnikatelskoucinnost. Odhadce A Ocenovân Majetku, Nb. 2, Prague, 2021. ISSN 1213-8223.
• Ding, X., Shahzad, M. (2021). The Effect of Environmental Administrative Penalty on Firm's Cash Flow: Evidence from China. E3S Web of Conferences 269, 01008. 2021. Retrieved from https://doi.org/10.1051/ e3sconf/202126901008.
• Drukarczyk, J. (2003). Unternehmens Bewertung (4. Ed.). München: Vahlen Verlag.
• IDW, (2008). Standard IDW S 1: Grundsätzezur Durchführung von Unternehmens Bewertungen. Düsseldorf: IDW-Verlag.
• Haß, L.H., Vergauwe, S., Zhang, Z. (2019). State-ownership and Bank Loan Contracting: Evidence From Corporate Fraud. European Journal of Finance, 25(6), 550.
• Hu, C.Y., Zhu, S.H. (2021). Method of Setting Environmental Administrative Fine Amounts, Int. J. Environ. Res. Public Health, 18(9), 5011. Retrieved from https://doi.org/10.3390/ijerph18095011.
• IVS, (2020). International Valuation Standards (12. Ed.). London: IVSC.
• Johnson, W.C., Xie, W., Yi, S. (2014). Corporate Fraud and the Value of Reputations in the Product Market. Journal of Corporate Finance, 25, 16.
• Knapkova, A., Pavelkova, D., Remes, D., Steker, K. (2017). Finanćn Analyza. Komplexn Pruvodce s Pnklady. (3. Ed.). Prague: Grada, 2017. ISBN 978-80-271-0563-2.
• Krabec, T. (2009). Ocenovón Podniku a Standardy Hodnoty. (1. Ed.). Prague: Grada.
• Magni, C.A. (2020). Investment Decisions and the Logic of Valuation: Linking Finance, Accounting, and Engineering. Springer.
• Marik, M. aj. (2011a). Metody Ocenovâm Podniku. (3. Ed.). Prague: Ekopress.
• Marik, M. aj. (2011b). Metody Ocenovâm Podniku Pro Pokrocilé. Hlub& Pohledna Vybrané Problémy. Prague: Ekopress.
• Marik, M. aj. (2018). Metody Oœnovón Podniku - Procesoceneni, Zókladn Metody a Postupy. (4. Ed.). Prague: Ekopress.
• Rûckova, P. (2019). Financnf Analyza. Metody, Ukazatele, Vyuziti v Praxi. (6. Ed.). Prague: Grada. ISBN 978-80-2712028-4.
• Song, C., Han, S.H. (2017). Stock Market Reaction to Corporate Crime: Evidence from South Korea. Journal of ^Business Ethics, 143(2), 323. 2017.
• Spieka, J. (2017). Finanćn Analyza Organizace z Pohledu Zàjmovych Skupin. Prague: C.H.Beck. ISBN 978-80-7400-664 -7.
• Czech Republic: Act No. 563/1991 Coll., On Accounting, as amended
• Czech Republic: Act No. 586/1992 Coll., On income taxes, as amended
• Czech Republic: Act No. 151/1997 Coll., On property valuation, as amended
• Wahlen, J., Baginski, S., Bradshaw, M. (2014). Financial Reporting, Financial Statement Analysis and Valuation. Boston: Cengage Learning. ISBN 978-1-285-19090-7.

Identyfikatory

DOI

10.2478/fiqf-2021-0026