FINANCIAL PERFORMANCE AND THE BUSINESS RISK IN AGRICULTURAL SECTOR OF ROMANIA

Abstract

The business risk is a permanent presence in the activities carried out by the companies. The financial decisions are often based on a compromise between risk and returns. To optimise the management of the companies, it is important to know the factors that generate risk and have a certain influence on the performance. This study has as main objective the explanation of the relationship between the financial performance and the factors that can be found within the microeconomic environment of the companies and determine the risk occurrence. The research is conducted on Romanian agricultural holdings from the vegetable sector, taking into account the period 2009-2014. The research methodology is based on econometric modelling. The results of regression analysis indicate that the farm performance is largely influenced by various business risk factors, of which the most important are the financing structure (financial risk) and sales effectiveness (commercial risk). The findings helped us knowing the risk generating factors in the agricultural holdings activity, to find solutions for a proper management that leads to increased performance.

Keywords

• financial performance
• business risk
• agricultural holdings
• regression model