THE IMPACT OF THE SUBSIDIES ON THE BUSINESS PERFORMANCE OF THE SPECIFIC GROUPS OF CROATIAN PUBLIC ENTERPRISES

Given that the structure of Croatian state aid instruments over the EU member states is dominated by the representation of state subsidies, the aim of this paper is to analyse the impact of subsidies on the performance of a specific group of Croatian public companies in the period 2005- 2015 compared in relation to other subsidized enterprises. These are companies that have changed their legal and economic identity (mergers, acquisitions, etc.) over the course of their lifetime and are mostly state-owned and have received significant amounts of government subsidies. The data used in the analysis is data from the registry of the Financial Agency’s annual financial statements. They have a panel data structure, and it is unbalanced panel, which assumes that companies that received subsidies in the observed period are observed only for the years in which they received them. The objective is to measure the impact of the subsidies received on the financial results in the years when they were awarded. As very few foreign and domestic researchers have addressed this topic, the contribution of this paper is to quantify relationships and test statistical models to determine the statistical link between the impact of subsidies on the financial performance of a specific group of public enterprises in an unbalanced panel of entrepreneurs and the correlation of independent variables and correlations of independent variables and independent with dependent variables. Two major independent variables were selected for assessing the impact of subsidies on the financial performance of a specific group of enterprises in the observed period, namely subsidy revenues and the share of subsidy revenues in the assets of an enterprise. While the dependent variables are: profit / loss for the period, newly created value, current liquidity ratio, asset turnover ratio and number of employees based on working hours. Based on the results of the analysis, it can be concluded that subsidies have an impact on the performance of a specific group of public companies in relation to the model estimate, in particular profit / loss for the period, newly created value, and at least to the number of employees based on working hours, suggesting a conclusion that a higher subsidies were given to companies with greater number of employees. The results of the research should take into account the restriction resulting from the database itself, i.e. the lack of a clear AOP position on government subsidies in the annual financial statements (AOP position includes subsidies, grants, incentives, etc.) and only the available position was used.