Does a Financial Crisis Affect Operating Risk? Evidence from Polish Listed Companies

Open access


In turbulent times of crisis the variability of both EBIT and operating revenue increase in comparison to a relatively stable post crisis period. The main aim of this paper is to investigate this relationship across these two periods. The hypothesis is that the degree of operating leverage (DOL) is significantly higher during the crisis period (2007-2010) than in the post-crisis period (2011-2015). Additionally the authors checked whether there were significant differences across defined industries and also verified whether all industries had responded in the same way to Financial Crisis as far as DOL is concerned. The main findings are: (a) The Financial Crisis of the years 2008‑2009 significantly influenced the DOL of Polish stock companies; (b) There are substantial differences of the DOL across industries; (c) The DOL in the case of all industries investigated changed in the same direction when comparing two selected subperiods.

Aguerrevere, F. L. (2009). Real options, product market competition, and asset returns, Journal Finance, 64, 957-983.

Arellano, F., & Scofield, B. (2014). A ratio-based equation for operating leverage, Academy of Accounting and Financial Studies Journal, 18(4), 1-6.

Baltagi, B. H., & Li, Q. (1990). A Lagrange multiplier test for the error components model with incomplete panels, Econometric Reviews, 9, 103-107.

Baum, C. F. (2000). XTTEST3: Stata module to compute Modified Wald statistic for groupwise heteroskedasticity. Retrieved from

Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. Review of Economic Studies, 47, 239-253.

Brigham, E. F. (1995). Fundamentals of corporate finance. Orlando, FL: The Dryden Press.

Bureau van Dijk (2016). A database of comparable financial information for public and private companies across Europe Amadeus, Bureau van Dijk Electornic Publishing, update number 262. Retrieved 31 July 2016, from Amadeus website,

Carlson, M., Fisher, A., & Giammarino, R. (2004). Corporate investment and asset price dynamics: implications for the cross section of returns, Journal of Finance, 59, 2577-2603.

Drukker, D. M. (2003). Testing for serial correlation in linear panel-data models. Stata Journal, 3, 168-177.

Dugan, M., & Shriver, K. (1992). An empirical comparison of alternative methods for the estimation of the degree of operating leverage. The Financial Revue, 27(2), 309-321. Greene, W. H. (2000). Econometric Analysis. New Jersey: Prentice Hall, Pearson Education, Inc.

Gulen. H., Xing, Y., & Zhang, L. (2011). Value versus growth: time-varying expected stock returns. Financial Management 40(2), 381-407.

Hausman, J. A. (1978). Specification tests in econometrics. Econometrica 46, 1251-1271.

Lev, B. (1974 September). On the association between leverage and risk. Journal of Financial and Quantitative Analysis, 9, 627-642.

Mandelker, G., & Rhee, S. G. (1984 March). The impact of the degrees of operating and financial leverage on systematic risk of common stock. Journal of Financial and Quantitative Analysis, 45-57.

Novy-Marx, R. (2011). Operating leverage. Review of Finance, 15, 103-134.

O’Brien, T., & Vanderheiden, P. (1987). Empirical measurement of operating leverage for growing firms. Financial Management, 16, 45-53.

Wooldridge, J. (2002). Econometric analysis of cross section and panel data. Cambridge, MA: MIT Press.

Journal Information


All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 68 68 13
PDF Downloads 22 22 4