Are Publicly Supported Companies in the Czech Food and Drink Industry Performing Better? Initial Findings from the Microdata

The objective of this study was to empirically observe, whether the Czech companies, which have received a financial subsidy from the European Regional Development Fund during the period of years 2008-2013, reported after the end of the programme better financial results. Design/methodology/approach: For each of the supported companies, authors have collected financial indicators obtained from their profit and loss statements and balance sheets (N=140, 69% of the supported companies in the sector). The three key performance indicators (KPIs) were selected to measure the firm profitability: return on assets (ROA), return on equity (ROE) and price-cost margin (PCM). Authors employed t-test to initially compare the periods before the firms received the subsidy (2005-2007) and after the end of the programme (2014-2015). Findings: The results of the paired t-tests have not found any statistically significant differences for the variables price-cost margin (PCM) and return on equity (ROE). However, the statistically significant difference was obtained for the return on assets (ROA), which suggested that the supported firms reported after the end of programme lower return on assets (ROA). Research/practical implications: Our initial observation suggests that participation of the Czech food companies in the Operational Programme Enterprise and Innovation did not lead to the better financial performance. However, our results need to be taken as preliminary, since more rigorous approach towards the programme evaluation needs to be implemented. This approach would require employment of the counterfactual analysis (CFA), taking into account large heterogeneity across the companies. CFA would also allow us to compare the supported companies with the similar firms present in the economy. Originality/value: Presented study exploits unique firm level dataset and contributes to the Czech regional knowledge by the first observation of the short-term effects of the participation in the public programme.