Some Blog materials can be downloaded only by EAA ARC members. Please log in here!
Over the last decade, companies headquartered in Eastern Europe had a going concern rate of 7.2%. Both the Eastern and Southern European regions have higher rates of going concern compared to the Northern and Western regions.
In fiscal year 2020, companies in Eastern Europe had an average going concern rate of 6.8%.
In this analysis, Eastern European countries consist of the following: Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, and Slovakia.
It is important to note, many Eastern European countries have a small population of publicly listed companies. To illustrate, the total number of audit opinions for companies headquartered in Poland is more than four times the total audit opinions for the other six countries combined. With few audit opinions, minor changes in the population can amplify going concern rates.
The Eastern Europe - Baltic countries all saw a decline in going concern rates in 2020. Latvia's rate has been declining since reaching a high point of 29.2% in 2017. The rate gradually declined in 2018 and 2019, before dropping sharply in 2020. Estonia, with a company population around two dozen, had no going concerns up until 2018. Lithuania had no going concerns in 2020.
The Eastern Europe - Central countries saw their going concern rates either decline or remain stable in 2020. However, the rates had increased in 2019, likely related to the COVID-19 pandemic.
Slovakia's going concern rate jumped significantly in 2019; despite declining in 2020, the rate remained elevated compared to the last decade. For Hungary, the going concern rate fluctuated between 2011 and 2020. However, due to small company populations in these Eastern Europe countries, few going concerns can drive the rate up. The Czech Republic has the smallest company population in this country sample. Therefore, their going concern rate represents a very small number of companies.
Poland has the largest company population. The going concern rate for Poland began gradually increasing in 2016, but 2020 saw a reversal of that trend.
Read our previous blogs for more information about going concern trends throughout Europe.