rss_2.0Central European Economic Journal FeedSciendo RSS Feed for Central European Economic Journal European Economic Journal Feed Management in Business Groups during the SARS-CoV-2 Pandemic<abstract> <title style='display:none'>Abstract</title> <p>This paper aims to assess the influence of the SARS-CoV-2 pandemic on the accrual-based earnings management patterns in non-financial business groups in the Warsaw Stock Exchange (WSE). This study contributes to the existing literature by considering earnings manipulation behaviours in assessing the reporting data quality, both in consolidated financial statements of business groups and individual financial statements of parent undertakings. The research methods are based on the Modified Jones Model with the simultaneous separation of individual subcategories of accruals via cross-sectional analysis and time-series data approach (separately for each business group). Empirical findings supported the presumption that earnings manipulation schemes in the SARS-CoV-2 transitional (2020) and crisis (2021) periods differed statistically compared to the previous 2019 and 2020 years, respectively. Moreover, this article proved that the company‘s potential financial distress could imply accrual-based earnings management behaviours and moderate the association between the SARS-CoV-2 pandemic and earnings manipulations activities. Finally, the obtained results confirmed that although business groups have an expanded set of balance sheet policy instruments, the quality of earnings reported in the individual financial statements of parent undertakings and the consolidated financial statements of business groups were similar during the SARS-CoV-2 pandemic.</p> </abstract>ARTICLEtrue Motivation under Communist Rule: Heritage from the Past in Modern Public Sector Organisations<abstract> <title style='display:none'>Abstract</title> <p>Applying retrospective design methodology, the article adds to our knowledge about inherited organisational values and their impact on management policies and practices. Questioning the label of Central and Eastern European workforce as low-motivated, shirking and passive, this article outlines the historical context of work motivation in former communist countries, investigating to what extent the motivation in public service organisations today may be explained by the past. It employs a framework developed by <xref ref-type="bibr" rid="j_ceej-2024-0018_ref_036">Vandenabeele et al. (2013)</xref> that connects management intentions to organisational and employee outcomes to analyse the malfunctions of the former rewards system and to examine how those impairments continue to influence public sector motivation today.</p> <p>Confirming Inglehart’s ‘scarcity’ theory, this article demonstrates that the several decades that passed after the fall of communism were insufficient in completely overcoming communist heritage. Malfunctions of the centralised communist motivation system resulted from the discordance between the management intentions and actions. Dysfunctions of monetary-based incentive schemes caused overwhelming work lethargy of shirking employees, who were discouraged from being creative or displaying initiative. Such patterns have still been observable at some public organisations in former Soviet countries. Thus, the past centralisation of the state continues to determine individual work motivation in public sector domains even today.</p> </abstract>ARTICLEtrue Regulation and Renewable Energies: Evidence from Generalized Panel Unconditional Quantile Regression<abstract> <title style='display:none'>Abstract</title> <p>This study aims to measure the impact of environmental regulation on the production of renewable energies in OECD countries from 1990 to 2021. Environmental policies stringency, environmental taxes, and CO<sub>2</sub> emissions are variables indicating environmental regulation, which affect renewable energies production. The study relied on unconditional quantitative regression methods. The study found that strict environmental policies do not necessarily enhance renewable energy production in countries with high or low production. Moreover, environmental tax revenues have varying impacts on renewable energy production based on renewable energy production in each country. For countries with below-average levels of renewable energy (Q25), environmental taxes positively affect renewable energy production; however, in countries with high production levels (Q90), environmental taxes show a negative effect. Furthermore, CO<sub>2</sub> emissions negatively affect the total production of renewable energy in all quantiles except Q50, whereas R&amp;D spending positively affects renewable energies in all quantiles except Q75. The estimates also showed a significant negative effect of patents on the renewable energy production in quantile Q10. The results underscore the importance of flexibility and adaptability in environmental policies and taxes. Finally, the study indicates that policies must be dynamic and respond to the specificity of each stage of renewable energy development in the studied countries.</p> </abstract>ARTICLEtrue of Natural Cosmetics Among Central European Consumers<abstract> <title style='display:none'>Abstract</title> <p>This paper aims to analyse consumers’ perceptions and attitudes towards natural cosmetic products from three Central European countries. In this study, we employed quantitative surveys on samples of 230 Czech, 175 Slovak, and 325 Polish respondents. Based on the obtained data, we investigate whether and how the respondents’ country impacts how they formulate their statements regarding the features of natural cosmetics. For each country separately, we study the dependencies of respondents’ opinions and statements on their sociodemographic profile. The results of the research show statistically significant differences in the respondents’ answers to all substantive questions depending on their country of origin. Four findings are worth highlighting: first, respondents from all three countries prefer natural cosmetics over conventional ones mainly for health and environmental reasons. Second, the frequency of buying natural cosmetics is influenced by some sociodemographic factors, although this varies in all three countries. Third, respondents who buy natural cosmetics more often are also more likely to indicate them as products of higher quality than conventional cosmetics. Lastly, the declared composition of the product is the prevailing decision criterion for consumers when selecting natural cosmetic products.</p> </abstract>ARTICLEtrue the Amount of Compensation for Harm Awarded by Courts Using Machine-Learning Algorithms<abstract> <title style='display:none'>Abstract</title> <p>The present study aims to explain and predict the monetary amount awarded by courts as compensation for harm suffered. A set of machine-learning algorithms was applied to a sample of decisions handed down by the Polish common courts. The methodology involved two steps: identification of words and phrases whose counts or frequencies affect the amounts adjudicated with LASSO regression and expert assessment, then applying OLS, again LASSO, random forests and XGBoost algorithms, as well as a BERT approach to make predictions. Finally, an in-depth analysis was undertaken on the influence of individual words and phrases on the amount awarded. The results demonstrate that the size of awards is most strongly influenced by the type of injury suffered, the specifics of treatment, and the family relationship between the harmed party and the claimant. At the same time, higher values are awarded when compensation for material damage and compensation for harm suffered are claimed together or when the claim is extended after it was filed.</p> </abstract>ARTICLEtrue Tax Revenue and Infrastructural Development in Nigeria<abstract> <title style='display:none'>Abstract</title> <p>In Nigeria, there has been a decline in oil revenue. This has impacted negatively on infrastructural development. This paper seeks to examine the effect of non-oil revenue as an alternative source of revenue for infrastructural development. The research design of the study was the ex post facto research design. The source of data was the secondary source and a time series of data from 1981 to 2021 was used in carrying out the research. The Autoregressive Distributed Lagged (ARDL) bounds test was used to determine the long-run and short-run relationship between the dependent and independent variables. It was observed that the variables are co-integrated, and as such, a long-run and short-run relationship exists among the explanatory variables. Furthermore, the ARDL short-run estimation result shows that the non-oil tax variables (proxied by VAT, CUSTD, and CIT) have a positive and significant effect on infrastructural development (proxied by total electricity production measured in Gigawatt hours (GWh) in Nigeria. In tandem, the ARDL long-run estimation results reveal that value-added tax, customs duties, and company income tax have a positive and significant impact on infrastructural development in Nigeria. Hence, an increase in the non-oil tax revenue base will boost infrastructural development in Nigeria in the long run. This finding is in tandem with the ARDL short-run estimation result. Therefore, it is inferred that Nigeria can experience infrastructural development when genuine commitment is made to explore an increase in non-oil revenue generation instead of being over-dependent on oil revenue.</p> </abstract>ARTICLEtrue between ESG and Financial Performance of Companies in the Central and Eastern European Region<abstract> <title style='display:none'>Abstract</title> <p>Observable climate change and an increase in the frequency of extreme climate events undoubtedly pose challenges for society and business operations. The changes being implemented in sustainability efforts are a response to these challenges. However, the question is how these measures affect companies‘ financial performance.</p> <p>The study aims to verify the relationship between the reporting of sustainability scores related to three aspects: environmental, social, and corporate governance (ESG). It focuses on the financial performance of companies in the Central and Eastern Europe (CEE) region in 2017–2021. The study will use panel regression and cross-sectional analysis. The results indicate a positive relationship between the disclosure of ESG activities and the financial performance of companies as measured by ROA. It was also observed that for companies operating in the financial sector, the correlation is greater, compared to companies operating in other sectors. This study contributes to the ongoing debate on the environment, society, and governance in the economy.</p> </abstract>ARTICLEtrue Relationship Between ESG Rating and Firm Value—Evidence from Companies Listed on Polish Capital Market in the WIG-ESG Index<abstract> <title style='display:none'>Abstract</title> <p>The literature are abound with studies on the impact of environmental, social, and governance (ESG) factors on a company‘s value, or more broadly, on its financial performance. However, most analyses concern developed markets, mainly because the largest rating agencies operate in these markets, as well as because these are markets where ESG awareness and regulations have developed much faster. In developing markets, the number of studies in this area is disproportionately smaller. Therefore, the purpose of this article is to examine the relationship between the environmental, social, and governance ratings (ESGR) of Polish listed companies included in the WIG-ESG index and their value. This study covered 36 companies listed in WIG-ESG in the period of 2019–2023. We used market data, financial data from examined companies and ESG data provided by Refinitive. The empirical results were negative but a non-statistically significant influence of ESGR and a company’s value. Further analysis indicated that none of the sub-ratings (environmental rating (ER), social rating (SR) and governance rating (GR)) had significant impact on value. The Polish market does not seem to recognize the potential of ESG factors in building the long-term value of companies and believes that the costs of ESG factors outweigh the benefits. Investors seem to disregard or underestimate ESG criteria when valuing companies, which may seem irrational when looking at the long-term effects of ESG factors.</p> <p>This article contributes to the existing literature by being part of the research on ESG factors and company value. The article expands the field of analysing the relationship between ESGRs and corporate value by examining this relationship not only using the overall ESGR, but also its individual sub-ratings. We also attempt to answer the question of where the channels of transmission of ESGRs on the value of the company are located, and which areas affect ratings. To the best of our knowledge, this is the first study of this type for the Polish market.</p> </abstract>ARTICLEtrue Frailty of Models, the New Era, or a Rotten World of Consumers’ Financial Behaviour?<abstract> <title style='display:none'>Abstract</title> <p>The aim of the article is to analyse the structure of consumer behaviour models and their applications to financial behaviour. The paper is theoretical in nature, examining generational breakdowns and selected trends in consumer behaviour. An analysis of the ‚rules‘ significant for types of consumer behaviour is conducted. Despite recently intensified theoretical and empirical analysis of consumer behaviour, a coherent research approach that integrates the issue of consumer behaviour with the specificities of the financial-services market has not yet been developed. Models remain frail, their functionality is still insufficient, and their applicability is constantly being altered by influences on consumer behaviour, including macro and microeconomic factors and the influence of scientific fields such as economics, sociology, psychology, management and anthropology. This article attempts to create a model that takes into account the general factors adopted in models constructed so far, along with the assumption that economic, cultural, social, personal, experiences, and other factors play a role in shaping and stimulating at least five variables: type of consumer from a particular generation (C<sub>y</sub>); type of financial products and services (X<sub>y</sub>); motivation (M<sub>y</sub>); capacity (Cap<sub>y</sub>); and opportunities (O<sub>y</sub>).</p> </abstract>ARTICLEtrue the Initial Export Boost: The Erosion of Trade Agreement Benefits<abstract> <title style='display:none'>Abstract</title> <p>Preferential trade agreements (PTAs) are widely acclaimed for their potential to mitigate market imperfections and expand export opportunities. However, in changing economic circumstances, these beneficial effects may only endure for a while and often gradually fade, affecting industries unevenly. This study delves into this overlooked phenomenon by exploring Poland‘s export performance in the Western Balkan (WB) region, where the implementation of Stabilization and Association Agreements (SAAs) has evidently generated export growth, primarily driven by tariff reductions, though these gains were manifested disproportionally across sectors. Employing survival analysis, the study validates the positive influence of SAAs on Polish export competitiveness within the WBs while uncovering its temporal erosion and sectoral discrepancies. On average, a 51% and 84% decline in Polish export competitiveness to WBs is observed after 5 and 10 years, respectively. Moreover, a unique dataset on non-tariff measures (NTMs) is employed to identify specific sectors encountering significant NTMs contributing to the reported diverse export patterns. These insights highlight the need for policies that acknowledge the diminishing benefits of trade agreements and mitigate the trade imbalances caused by NTMs.</p> </abstract>ARTICLEtrue Market Enlargement and Technical Barriers to Trade: Revisiting the Evidence<abstract> <title style='display:none'>Abstract</title> <p>EU enlargements have given new EU member states access to the European Single Market. While tariff liberalisation was already completed at the time of enlargement, technical regulations were subject to different sectoral approaches, including harmonisation and mutual recognition. We employ a structural gravity model estimated using sectoral trade data from 1987 to 2020 to assess the trade effects of these measures. We find that trade expansion, particularly exports of the NMS to the incumbent EU members, has been stronger in the sectors covered either by the Old Approach (full harmonisation) or the New Approach (essential requirements) than in sectors covered by mutual recognition. The New Approach has been more effective when coupled with mutual recognition at the sector level than with either approach alone. Our results imply that the TBT harmonisation has had a heterogenous impact on different sectors (the most important for low-tech industries was the Old Approach, while for high-tech, it was the New Approach).</p> </abstract>ARTICLEtrue on the Political Economy of International Trade<abstract> <title style='display:none'>Abstract</title> <p>International trade appears to be strongly dependent on the political environment and institutional arrangements. In this context, the commented strand of economics is expected to follow the relationships that can be turbulent. The paper reviews the available literature on international trade, with a particular focus on aspects of the political economy. These threads are described in the context of the past and present literature, as well as prospects for future research. Over the decades, the focus of the debate has shifted strongly. The analysed issues reflect not only current events affecting the shape of international trade, but also the availability of data or the growing range of quantitative tools. The observed progress and evolution of the political economy of international trade has brought numerous conclusions of scientific and practical importance.</p> </abstract>ARTICLEtrue Safety: A Developing Country Perspective<abstract> <title style='display:none'>Abstract</title> <p>Developing countries, trying to achieve an acceptable level of food safety at the least possible cost (efficiency objective) and facilitation of market access to the large and lucrative developed country food markets (market access objective), could follow the multilateral, regional, unilateral or the independent approach. The paper studying the pros and cons of these approaches aims to determine the most appropriate food safety reform package. It shows that the best approach is the unilateral. Under this approach the achievement of efficiency objective requires the adoption and implementation of the multilateral approach. The achievement of market access objective requires the adoption and implementation of the regulatory regime of the developed country whose markets the developing country is intending to penetrate. Instead, the paper proposes that the developing country adopts and implements the developed countries‘ regulatory regime only in agricultural sub-sectors with highest comparative advantage scores, and that in all other agricultural sub-sectors the country should adopt and implement the regulatory regime as developed by multilateral approach. Since the tasks associated with designing and implementing the food safety policy reform are challenging, the paper advocates that this task should be left to a new institution, the ‘Food Safety Council‘, which needs to be formed as an autonomous public institution with sufficient financial and technical resources.</p> </abstract>ARTICLEtrue the EU‘s Fourth Freedom Be Further Challenged by Present Members of the Single Market?<abstract> <title style='display:none'>Abstract</title> <p>The creation of a single market in Europe, conceived as the application of the so-called four freedoms (goods, services, capital and manpower) of movement was in vogue in the 1990s. What has happened to this dream? At the time not only business communities but also consumer associations, and even labour unions were all in favour of opening their national economies to the winds of continental competition. Three decades after, some national communities seem to have turned their backs on the free movement of people. The case of Eastern European immigrants settling for work in the UK after 2004 comes to mind, something which arguably was one of the main reasons for the Brexit vote in 2016. The issue could again become the focus of populist governments or parties (e.g., in Italy, France, Sweden, Austria, Hungary or The Netherlands), should the danger of an EU-wide recession or an idiosyncratic crisis in one of the poorest member states (MSs) materialize. Actually, a new intensification of intra-EU migration flows could be one of the outcomes of the unravelling of supply chains as a result of the COVID epidemic and geopolitical considerations, such as the EU’s wish to diminish trade dependence from China and Russia. The ground is slowly eroding under the feet of those adamant to cling to the free movement of people as part of the acquis. The EU Commission should give thought, before it is too late, about the fourth freedom particularly in view of future EU enlargements.</p> </abstract>ARTICLEtrue Special Edition of the Central European Economic Journal to Mark the 70 Birthday of Prof. Jan Jakub Michałek Heterogeneity and International Trade Liberalisation: A Generalized Cournot Oligopoly Approach<abstract> <title style='display:none'>Abstract</title> <p>The main goal of this article is to contribute to the theoretical analysis of international trade under imperfect competition using the Cournot oligopoly model with heterogeneous firms. In particular, our objective is to provide some insights into the role of cost asymmetry in studying the effects of trade liberalisation in the Cournot oligopoly framework. In order to introduce firm heterogeneity into the oligopoly model we use the generalised Cournot framework with asymmetric firms that differ in terms of their productivity, levels of output and market shares. We show that trade liberalisation leads to the elimination of less productive firms and results in lower equilibrium prices, higher sales per firm and lower markups in the industry.</p> </abstract>ARTICLEtrue Much Neoprotectionism is There in Contemporary World Trade?<abstract> <title style='display:none'>Abstract</title> <p>Negative effects of globalisation and liberalisation of trade are countered using protectionist measures. Contemporary protectionism, typically termed neoprotectionism, is put into practice using a wide variety of non-tariff instruments, with a considerably lesser degree of transparency compared to tariffs, which are more difficult to identify and measure. The aim of this paper is to determine the dynamics of protection, as well as the category and geographical structure for the use of trade policy instruments in the world goods trade in the years 2010–2022. The study was based on source materials from the Global Trade Alert (GTA) and the United Nations Conference on Trade and Development (UNCTAD). The conducted analyses showed that interventions taken in the world goods trade in the years 2010–2022 were primarily trade restrictions executed using non-tariff measures. In terms of its geographical distribution the relatively greatest scope of protectionism observed was for the trade policy of China and the USA. In terms of the product category, the sale of agricultural produce was protected the most. The realised model of protectionism differed depending on the group of products being traded, the standard of economic development of the country implementing trade policy measures, its export specialisation and the degree of self-sufficiency. The protectionist character of the trade policy was also enhanced during economic crises.</p> </abstract>ARTICLEtrue of TBTs on Trade in ICT Goods: Differentiating by Regulatory Objectives<abstract> <title style='display:none'>Abstract</title> <p>This paper analyses how different types of technical barriers to trade (TBTs) imposed on imports of information and communications technology (ICT) goods globally affected the value and volume of imported goods during the period of 1996–2018. Key words cited in the TBTs give an indication of the aims behind the imposition of TBTs. The results indicate that TBTs have a strong positive impact on the value of imports. While many key words cited in TBTs notified to the World Trade Organization (WTO) affect the value and volume of imports in a positive way, certain other TBTs function as trade barriers.</p> </abstract>ARTICLEtrue of management performance measures (MPMs) disclosed in primary financial statements prepared in accordance with new standard planned to supersede IAS 1<abstract> <title style='display:none'>Abstract</title> <p>We outline the management performance measures (MPMs)' boundaries based on the upcoming introduction of MPM's definition to International Financial Reporting Standards (IFRS). The literature investigates business performance measures concentrating on managers' needs, while IFRS aims to provide financial information to external users who provide resources to the entity. This indicates a gap between how performance metrics have been investigated so far and how IFRS will adopt them. We used analysis of the exposure draft of the planned standard together with working materials developed in the consultation process. Further, a case study is presented. Results show that the scope of MPM to be introduced to IFRS is limited compared to the broad spectrum of performance measures presented in the literature. We contribute by showing the avenues for future performance measures research using signalling and agency theory and by indicating the limited scope of MPMs and thus bound prospects for using them for a full assessment of the entity‘s performance.</p> </abstract>ARTICLEtrue rules as institutional tools for public debt management in the European Union Member States<abstract> <title style='display:none'>Abstract</title> <p>This paper aims to assess the impact of the second-generation numerical fiscal rules on the effectiveness of public debt management in the Member States of the European Union. The research was conducted using dynamic panel models on a sample of 27 EU Member States over the period 2008–2021. The effectiveness of public debt management was determined by the level of public debt servicing costs, considering not only the impact of the quality of numerical fiscal rules on interest payments, but also other factors influenced by these rules, such as the quality of fiscal policy, the solvency of public finances and the quality of institutional governance. The motivation for this topic was to evaluate the effectiveness of the second-generation numerical fiscal rules following the changes made to their design in the context of the reconstruction of the EU fiscal surveillance system after the global economic and financial crisis of 2008–2010. The research has found that strong numerical fiscal rules improve the effectiveness of public debt management. In addition, stable fiscal policy and higher solvency of public finances, as well as political stability and the absence of violence, are conducive to lower public debt servicing costs. This paper enriches the literature by extending it with a new approach to fiscal rules, highlighting their multifaceted impact on the quality of public debt management.</p> </abstract>ARTICLEtrue