DuPont analysis among European dentistry companies to measure the impact of the COVID-19 pandemic

161 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance DuPon analysis among Eu opean den is y companies o measu e he impac o he COVID-19 pandemic Tomas He yan1, Ka in Gajdo a2 1 Silesian Uni e si y in Opa a, School o Business Adminis a ion in Ka ina, Depa men o Finance and Accoun ing, Czechia, ORCID: 0000-0003-2027-7149, [email p o ec ed]; 2 Silesian Uni e si y in Opa a, School o Business Adminis a ion in Ka ina, Depa men o Economics and Public Adminis a ion, Czechia, ORCID: 0000-0002-7686-2729, [email p o ec ed]. Abs ac : Al hough heal h economics belongs o he highly espec ed economic disciplines wi hin he esea ch li e a u e, he e is a conside able gap ela ed o he in es iga ion o den is y in pa icula , e en a e he global pandemic o COVID-19 disease. Fundamen ally, he DuPon amewo k is a well-known complex analysis o e alua e companies om he poin o iew o inancial pe o mance. The in es iga ion o he e u n on equi y as a ela ion be ween he e u n on asse s and he equi y mul iplie , simply called he le e age e ec , is p esen ed in his pape . The e o e, his s udy aims o es ima e he e ec o le e age and i s changes due o he COVID-19 pandemic among den is y companies in selec ed Eu opean coun ies wi h di e en heal hca e insu ance sys ems. This compa a i e in es iga ion ocused on he gene alised me hod o momen s wi h dynamic panel da a om O bis, he Bu eau an Dijk inancial da abase o 1,128 den is y companies in nine Eu opean coun ies. Me hodologically, conce ning hose pos -es ima ion echniques o e alua e o e - and unde es ima ion o he models. I has been di e en ia ing be ween companies wi h a high o low owne ship concen a ion s uc u e. The esul s ha e shown di e ences in he le e age e ec du ing he pandemic, assuming ha companies wi h a majo owne inc eased hei equi y, while he deb le e age inc eased among hose companies wi h dispe sed owne ship and ice e sa. I economic heo y s a es ha deb inancing is mo e e ec i e o a company han using in e nal sou ces, i is appa en ly di e en in he case o den is y du ing he pandemic. Howe e , dispe sed owne ship is mo e o en ela ed o den is y, acco ding o me ge s in his pa icula business indus y. Keywo ds: Financial pe o mance, deb le e age, heal h economics, heal hca e sys ems, concen a ion o owne ship s uc u e. JEL Classi ica ion: G32, I11, M21. APA S yle Ci a ion: He yan, T., & Gajdo a, K. (2024). DuPon analysis among Eu opean den is y companies o measu e he impac o he COVID-19 pandemic. E&M Economics and Managemen , 27(1), 161–174. h ps://doi.o g/10.15240/ ul/001/2024-1-010 In oduc ion DuPon analysis is one o he oldes ame- wo ks o undamen ally e alua ing a company. Howe e , no one has e e used ha , e en pa - ially, o es ima e he impac o he COVID-19 pandemic on company pe o mance. Al hough Chang e al. (2014) used he DuPon amewo k wi hin he heal h economics al eady. The pan- demic is gene ally conside ed he main cause o economic down u n among many indus ies in 2020 and 2021, and den is y is no an excep- ion (Pa el, 2020). The ques ion also is whe he he heal hca e sys em i sel , ei he Be e idge o Bisma ck model in es iga ed h oughou 162 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance he li e a u e (Deppe & O esko ic, 1996; Lamei e e al., 1999; Ma mo & Okma, 1997; Wend , 2009; Wids öm & Ea on, 2004), could ha e somehow a ec ed he si ua ion among hose den is y companies du ing he pandemic. Based on he li e a u e in he nex sec ion, h ee di e en esea ch ques ions mo i a e his s udy: i) Since e e y human being li ing in a de eloped economy is somehow ela ed o den is y as a pa ien , did he COVID-19 changes caused by he pandemic a y ac oss coun ies wi h a di - e en heal h ca e sys em? (i.e., Be e idge s. Bisma ck); ii) E en hough he DuPon ame- wo k is a c ucial pa o he undamen al analy- sis, could i be help ul o es ima e he impac o he pandemic on den is y?; and iii) Is he end o me ge s ob ious among den is y companies e en du ing he a ec ed pe iod? Focused on he Dupon analysis, his pape aims o es ima e he le e age e ec and i s changes due o he COVID-19 pandemic among den is y companies in selec ed Eu opean coun- ies ha ing ei he he Be e idge model (Na ional Heal h Se ice Sys em) o he Bisma ck model (Compulso y Uni e sal Heal h Insu ance Sys- em). Fo he empi ical pa o his pape , DuPon analysis, essen ially e alua ing a b eakdown o p o i abili y and commonly e en wi hin heal h economics (Chang e al., 2014; Tu ne e al., 2015), has been deployed, acco ding o Soliman (2008). The e o e, using his pa icula ech- nique, indi idual in luences ha a ec he inal alue o p o i abili y a ios ha e been in es i- ga ed (Doo asamy, 2016; Fai ield e al., 1996, 2009; Nissim & Penman, 2001). Fu he mo e, an in es iga ion o den is y companies wi h a high concen a ion o owne ship has a majo owne compa ed o hose wi h a low concen a- ion and dispe sed owne ship is ca ied ou . The con ibu ion o his s udy is also me hod- ological, es ing up- o-da e pos -es ima ion echniques while using he sys em-gene alised me hod o momen s wi h longi udinal da a. This pape is s uc u ed as ollows. As men ioned abo e, Sec ion 1 b ie ly e iews he li e a u e ela ed o heal h economics. The me hodology and da a a e desc ibed in Sec ion 2. A discussion o GMM es ima es is made in Sec ion 3 o his pape , igh be o e i s conclusion. 1. Theo e ical backg ound I is impo an o he economies o indi idual coun ies ha people can wo k and be ac i e in he labou ma ke . To be able o be, hey mus be heal hy. The e o e, i is necessa y o be awa e o his a he highes le els o in- di idual economies. O al heal h is also ela ed o he issue o heal h. O al heal h, along wi h g owing awa eness o he impac ha limi ed den al co e age has on o al heal h and o e all heal h and well-being, has ecei ed inc eased a en ion in ecen yea s (Winkelmann e al., 2022). The e o e, i is necessa y o pay consid- e able a en ion o he a ea o o al heal hca e p o ide s and o suppo den is y and ela ed ields. The e o e, a en ion should be paid bo h o den is s bu also o a ious ields o p o id- e s and p oduce s o se ices in he ield o o al heal h ca e. Acco ding o Pe es e al. (2019), he pe sonal consequences o ch onic un- ea ed o al diseases a e o en se e e and can include un elen ing pain, educed quali y o li e, los school days, dis up ion o amily li e, and educed wo k p oduc i i y. The cos o ea - ing o al diseases ep esen s a la ge economic bu den on amilies and heal hca e sys ems (Bawaska & Bawaska , 2020). O al diseases a e undoub edly a global public heal h p oblem, wi h pa icula conce n o e hei inc easing p e alence in many low- and middle-income coun ies linked o wide social, economic, and comme cial changes (Pe es e al., 2020). I is also impo an o moni o ce ain socio- economic inequali ies in he heal h o he popu- la ion (Do e al., 2010). Inequali y in o al heal h is expec ed due o he g owing socioeconomic inequali y o people, and his has a di ec impac on he unc ioning o den al businesses. In coun- ies whe e socioeconomic di e ences a e mo e p onounced, inequali y in he a ea o o al heal h is also mo e p onounced (Do e al., 2010; Elani e al., 2012; Ga cia & Tabak, 2011; Hosseinpoo e al., 2012). An in e es ing app oach can be obse ed in he s udy o Pinilla and González (2009), which aces he ela ionships be ween den al heal h and he use o den al ca e wi h socioeconomic ac o s, human esou ces, and he inancing and o ganisa ion o den al ca e sys ems in Eu opean coun ies. Howe e , Pi- nilla and González (2009) ound no e idence ha be e access (a policy aimed a imp o - ing access o o al heal h se ices) o den is s imp o ed den al heal h in 12-yea -old child en. The main pa ame e s ha in luence o al heal h and i s de elopmen a e income and le el o educa ion wi hin coun ies. A highe numbe o den is s and a ela i ely young adul 163 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance popula ion ha e a posi i e e ec on he use o den al se ices. The impo ance o p o iding den al medical ca e is clea ly de ined. Fo his, i is necessa y o s a e ha e e y hing is ela ed o inance. And he ield o den is y is e y speci ic om he poin o iew o inancing. Di e en ap- p oaches o he p o ision o publicly a ailable den al ca e o elemen s he eo a e adop ed (Wids öm & Ea on, 2004). In gene al, i can be said ha he expendi u e on den al ca e is i- nanced om se e al sou ces, i.e., om public sou ces and di ec paymen s om households (Baili & Beazoglou, 2008). Public esou ces a e ela ed o he heal h sys ems es ablished in a gi en coun y. In Eu ope, he e a e wo ypes o heal hca e sys ems used. They a e he Be e idge model and he Bisma ck model. The Be e idge model is buil on he p inciple o heal h ca e paid o h ough edis ibu i e p ocesses in he economy and hus om axes (Lamei e e al., 1999; Wend , 2009). The Bis- ma ck model is based on uni e sal heal h insu ance and heal h ca e is co e ed by public heal h insu ance, which is manda o y (Deppe & O esko ic, 1996; Ma mo & Okma, 1997; Wend , 2009). These wo models a e he basis o heal hca e in Eu opean coun ies. So, i ol- lows ha medical den al ca e in Eu opean coun ies is pa ly paid o ei he om collec ed axes o h ough insu ance companies. Bu i is s ill ue ha in almos all coun ies, den al ca e is inanced o a g ea e ex en by p i a e pa ien paymen s han in o he sec o s o heal h ca e (Wids öm & Ea on, 2004). Funding in he ield o den al ca e is highly deba able, wi h cons an ly changing a i udes in di e en coun ies, which can also a ec he den al businesses hemsel es. In mos coun ies, den al ca e is only pa ially co e ed by public heal h insu ance, which can also ha e a ce ain impac on he gene al o al heal h o esiden s and households. On he nega- i e impac o insu icien unding om public heal h insu ance unding (Ahmadi e al., 2021). A s udy has been ca ied ou ha sugges s ha inancing heal h ca e h ough households’ di ec inances esul s in “ca as ophic heal h expendi- u e” and impo e ishmen o he popula ion and hei heal h in many coun ies. Liu e al. (2019) explain ha , in gene al, ca as ophic heal h expendi u es ep esen ou -o -pocke paymen s ha exceed a speci ied h eshold o household income o household abili y o pay. The indings o his s udy (Ahmadi e al., 2021) s a ed ha den al se ices a e he basis o ca as ophic heal h expendi u es, and hese se ices mus be co e ed o a g ea e ex en by basic heal h insu ance o om o he public sou ces. Ano he a ea ha is g adually coming o he o e and is beginning o a ec he inancial s abili y o den al businesses is he p essu e on he ecological sus ainabili y o den al p ac- ice (Duane e al., 2019). The e o e, he a ea o sus ainable den is y is gaining impo ance. Duane e al. (2020) men ion he global commi - men o sus ainabili y, and he ac emains ha he demands o a sus ainable wo ld a e g ow- ing. Wi hin den is y, i is possible o moni o he possibili ies o imp o ing he sus ainabili y o he en i onmen in se e al a eas. The bigges bu den is a elling o he den al o ice, which is o en ou side he pa ien ’s egion, and his e- sul s in a u he inc ease in ca bon emissions, which also con ibu es o damage o human heal h. O he a eas a e ma e ials and de ices o den al p ac ice. La ge den al o ganisa ions can in luence hei supplie s by choosing en i- onmen ally iendly p oduc s om sus ainable companies. Howe e , his is ano he a ea ha can place a g ea e inancial bu den on den al companies. Cu en ly, den is y is also eco e - ing om he e ec s o COVID-19. Pandemic and indi idual pandemic measu es ha e g ea ly a ec ed den al businesses (Pa el, 2020). The den al p o ession is g adually changing in all di ec ions (Samson & Schwa z, 2019). His o ically, den is s we e la gely owne s o hei businesses. Ano he op ion was o join an olde den is wi h a ision o buying he o ice in he u u e. The p oblem was a lack o knowl- edge o how o handle he managemen o one’s business. The e was a lack o basic knowledge in he ield o business economics. O e ime, a new end eme ged when la ge g oups o businesses we e ounded o which den is s belong. I is easie o hese den is s o ake o e he concep o managing and managing hei business. Le in (2003) men ions ha den is s o en s uggle wi h dealing wi h he business side o hei p ac ices. Wi h a be e unde - s anding o he business aspec s, i is possible o edi ec ene gy and c ea e a success ul p ac- ice while pe o ming excellen den is y. The den is s’ app oach o hei p o i s, which hey achie e by p o iding ca e and sub- sequen paymen om bo h sou ces, is also ela ed o he inancing and expansion o 164 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance he ca e hey p o ide o he imp o emen o he quali y o ca e. The goal o e e y en ep e- neu is o make a p o i and i is no di e en o p i a e den al cen e s. I is hen impo an o conside how o deal wi h he p o i achie ed. Demi bag e al. (2015) claim ha he ein es - men o p o i s back in o he business is he key o success. Rein es men is desc ibed by Cull and Xu (2005) as he pe cen age o p o i in- es ed back in o he company. McCa hy e al. (1993) s a e ha i is a decision o expand an exis ing business. Va iables ha , acco ding o Demi bag e al. (2015), a e ele an o he ex- ension o a i m’s li espan include ac o s o which ein es men may be key, and hese a e a scale o ope a ion (Be co i z & Mi chell, 2007), esou ce u ilisa ion (Be co i z & Mi chell, 2007; B adley e al., 2011) and s a egy g ow h (Ma a & Po ugal, 2002). Financial managemen and ein es men decisions a e pa icula ly speci ic i he com- pany has a di e en owne and manage (Coles e al., 2001). The OLS esul s sugges ha owne ship is signi ican o i m pe o mance, bu when endogenei y is aken in o accoun , owne ship is no s a is ically dependen on pe - o mance measu es (Welch, 2003). Be le and Means (1932) we e one o he i s o deal wi h he ela ionship be ween a i m’s owne ship s uc u e and i s pe o mance. He a gues ha as owne ship di usion inc eases, sha eholde s become powe less o con ol p o essional man- age s. He u he a gues ha since he in e es s o managemen and sha eholde s a e gene ally no aligned, co po a e esou ces a e no used e icien ly in maximising co po a e p o i s. The size o he company can also be deci- si e in he decision o ein es pa o he p o i back in o he business. Small and medium-sized en e p ises a e likely less in e es ed in ein es - ing p o i s in hei business. As Wellalage and Reddy (2020) say, he ein es men o p o i s back in o he business is a ec ed by he p es- ence o weak ules and egula ions, a weak o - ganisa ional and ins i u ional en i onmen , and a highly unce ain business en i onmen . These aspec s also make SME owne s eluc an o e- in es p o i s in o hei businesses. Fu he mo e, he e a e di e en app oaches o using p o i o you business. Caselli and Neg i (2021) p esen he pecking o de heo y, which s a es ha com- panies p io i ise hei sou ces o inancing and conside equi y inancing as a las eso . This heo y s a es ha businesses ollow a hie a chy o unding sou ces. Fi s , in e nal unds a e used, and when hey a e used, he loan op ion is used. Only when i is no possible o ake an- o he loan, he equi y is used. Be ge and Udell (1998) say ha he hie a chy o inancing used depends on he size o he i m and he le el o de elopmen because, o each s age o g ow h, he e is a ce ain le el o in o ma ion asymme y and inancing needs. This is also known as he “ inancial g ow h cycle.” Mos den is s enjoy he clinical aspec s o he den al p ac ice bu o en ind manag- ing business sys ems and s a challenging. I is unde s andable. Mos den is s lack busi- ness managemen aining. The p oblem is ha den is s ain o se e al yea s in he p ac ice o den is y and hen a e h own in o he busi- ness en i onmen wi hou any speci ic business aining (Le in, 2003). Den is s who un hei p ac ice mus also conside how o app oach ea nings managemen , whe he hey will also use he ein es men op ion. As pa o he ap- p oach o he ein es men o p o i s in one’s business, i is also possible o obse e a di e - en app oach om he poin o iew o he size o he en e p ises. I can be assumed ha small and medium-sized companies will end o ein- es less han la ge en e p ises. The e may also be a di e ence in app oaches o ein es men wi hin Eu ope. Den al businesses in Cen al and Eas e n Eu ope a e likely o be a he small and medium-sized. Wellalage and Reddy (2020) also men ion in hei a icle ha SMEs ein es p o i s in hei business less. Di e en app oaches o ein es men , bu also he o m o den al businesses be ween he coun ies o Wes e n Eu ope and he coun ies o Cen al and Eas e n Eu ope, a e no he only ones. Di - e ences in o he heal h a eas a e also e iden . This di e ence is also add essed by Koloss á y e al. (2021). Thi y yea s a e he ansi ion pe iod, s a ing in 1989, he coun ies o Cen al and Eas e n Eu ope, ep esen ing one- i h o he en i e Eu opean popula ion, sha e many his o ical, social, poli ical, economic, and cul- u al cha ac e is ics. The e is s ill a signi ican gap be ween Cen al and Eas e n Eu opean coun ies and Wes Eu opean coun ies. Ko- loss á y e al. (2021) epo ha di e ences in isk ac o s and pe iphe al ascula ca e ac oss Eu ope appea o be angible and can be conside ed a signal o exis ing di e ences. Imp o emen s in esea ch and he de elopmen and c oss-bo de sha ing o scien i ic da a a e 165 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance essen ial o ini ia e and acili a e con e gence in his a ea. The di e ence in den is y’s app oach o ein es ing p o i s in o i s business can also be seen ac oss he heal hca e sys ems used in a gi en coun y. The wo a o emen ioned heal hca e sys ems a e used in he Eu opean Union. The Be e idge model (Na ional Heal h Se ice Sys em) is used by 12 EU coun ies: Denma k, Finland, Cyp us, Es onia, G eece, I eland, I aly, La ia, Mal a, Po ugal, Spain, and Sweden. The Bisma ck model (Compulso- y Uni e sal Heal h Insu ance Sys em) is used by 15 EU coun ies: Aus ia, Belgium, Bulga ia, C oa ia, Czech Republic, F ance, Ge many, Hunga y, Li huania, Luxembou g, Ne he lands, Poland, Romania, Slo akia, Slo enia. In o he selec ed Eu opean coun ies (i.e., G ea B i ain and No way) ha a e es ed bu a e no pa o he EU, he Be e idge model o he heal hca e sys em is used. Las bu no leas , in his pa icula case, acco ding o Soliman (2008), DuPon analysis decomposes e u n-on-ne -ope a ing-asse s (RNOA) in o wo mul iplica i e componen s, i.e., p o i ma gin and asse u no e . Bo h a e in luenced by hei a ilia ion o he indus y. The use o DuPon analysis is also possible in he a ea o heal h economics da a. This is also sol ed by Tu ne e al. (2015), who analyse he p o i abili y o hospi als and, o hese pu poses, s a e ha i is also possible o use DuPon analysis. This analysis is used o assess he quali y o he income. By b eaking down e u n on equi y in o p o i ma gin, o al asse u no e , and capi al s uc u e, DuPon ’s analysis e eals wha d i es o e all p o i abili y. Tu ne e al. (2015) ind ha in es o -owned hospi als ha e la ge p o i ma gins, highe e - iciency, and a e mo e le e aged. Doo asamy (2016) also posi i ely e alua ed he DuPon analysis by poin ing ou ha s ock ma ke ola- ili y makes in es men decisions con o e sial. In es ing a ce ain amoun o money equi es a p ope analysis o make he necessa y deci- sion. DuPon analysis can con ibu e o his. P o i b eakdown is impo an o assessing p o i abili y, and, u he , a classi ica ion scheme imp o es p o i abili y o ecas s as well (Fai ield e al., 1996). Fai ield e al. (2009) men ion ha using an analy ical model can imp o e pe o mance p edic ion. An impo an inding is also ha indi idual componen s o income can e eal signi ican impac s on indus y, e en hough his is no e iden in o e all p o i abili y. Nissim and Penman (2001) also w i e abou he elemen s o he necessa y accoun ing in- o ma ion and he b eakdown o a be e o e- cas o p o i abili y. In hei s udy, Chang e al. (2014) also d aw a en ion o he issue o using DuPon analysis o he heal hca e sec o . They say DuPon componen s a e less in o ma i e accoun ing signals in heal hca e compa ed o he indus y-wide sample. Analys s say ha he moni o ing o he heal hca e sec o should ocus on changes in p o i ma gins a he han changes in asse u no e . Only hen will he ac- cu acy o p o i abili y o ecas s be imp o ed. Acco ding o Soliman (2008), in p ac ice, he use o inancial a io indica o s adjus ing he indus y is less equen , and a la ge pa o esea ch on he a e age e u n o p o i abili y assumes whole-economy e e sal goals. 2. Resea ch me hodology Jus o explain wha DuPon analysis is ocused on, he main ela ions a e desc ibed by he nex wo equa ions (Chang e al., 2014; Soliman, 2008). The e u n on equi y (ROE) using he ea nings a e ax (EAT) o i companies (excluding hose wi h nega i e equi y) in ime is desc ibed in Equa ion (1) as ollows: (1) To measu e how e ec i ely asse s a e used in den is y, he e u n on asse s (ROA) using ea nings be o e in e es and ax (EBIT) is de- sc ibed in Equa ion (2): (2) Ne e heless, o es ima e he le e age e - ec wi hin ROE and he u no e o asse s wi h- in ROA, he gene alised me hod o momen s (GMM) is used. The use o GMM when wo king wi h panel da a is jus i ied especially when wo king wi h a dynamic panel, when he de- layed, explained a iable on he igh -hand side o he equa ion is also s a is ically signi ican , he obse ed pe iod o es ima e he eg es- sion coe icien s is sho e (T ≤ 10), bu he c oss-sec ion o he panel includes a la ge numbe o companies. Because o he gene ali- sa ion o he me hod o momen s, he p oblem o he e o scedas ici y o he esidual componen 166 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance is also sol ed when using he wo-phase model. The me hod i sel was cons uc ed in hei wo k by Ande son and Hsiao (1981) and subsequen ly by Hansen (1982) and u he ex ended by Hansen e al. (1996). Howe e , A ellano and Bond (1991) also con ibu ed o i s de elopmen by poin ing ou he p oblem o se- ial co ela ion o he idiosync a ic e o , which can be unde s ood as a esidual componen ac oss he panel. A ellano and Bo e (1995) subsequen ly modi ied he wo-s age, di e - enced es ima o , which di e ed om he p e- ious e sion by ejec ing homoscedas ici y. In he ollowing yea s, howe e , Blundell and Bond (1998) ocused on he e o componen o he models, ocusing in pa icula on he pos- sible dis o ion o he esul s due o sys ema ic e o s in he es ima ion o he s udied e ec s o he wo-s age es ima ion. They cons uc ed a sys emic GMM model ha allows he inclu- sion o a much la ge numbe o ins umen al a iables. The p oblem o e o co ec ion was sol ed only by Windmeije (2005), whose ech- nical speci ica ion o he obus componen o he model e ealed no only alsely signi ican esul s bu also di e en signs o signi ican coe icien s. A obus e o ec o has become essen ial o co ec ly es ima ing he wo-s age coe icien s o he dynamic panel GMM model. K ip ganz and Swa z (2019) subsequen ly cons uc ed a modi ied e sion o GMM es ima- o s wi h panel da a, including many newly in o- duced diagnos ic es s, including modi ica ions o he Sa gan and Hansen es s o use in Wind- meije es ima ion e o co ec ion discussed by Sande son and Windmeije (2016), la ely sugges ed e en by Hansen and Lee (2021). In he case o many s udies, i is no e en en i ely clea how o es he lag se ing o he ins umen al a iables, which do no en e he basic es ima ion equa ion bu a e ela ed o he e o componen o he model wi h a obus e o ec o . K ip ganz and Swa z (2019) s a e ha only i he ho- moscedas ic esidual componen o he model is con i med, he momen s can be es ed using he Hausman es . Howe e , And ews and Lu (2001) al eady p esen he MMSC es (model and momen selec ion c i e ia), which makes i possible o compa e models p ecisely in e ms o hei se ing o he momen s o he a iables o he eg ession equa ion, including he momen s o he ins umen al a iables. The sys em GMM model wi h a dynamic panel including in a-pe iod da a om pa o he missing da a is gene ally desc ibed by he ollowing Equa ion (3): (3) whe e: αj – he o al numbe o p pa am- e e s o es ima ing he explana o y a iable ROE o i i ms lagged by one yea ( − 1); xi means 1 × k1 ec o o he p ede e mined a i- able ROA; β1 is k1 × 1 ec o o pa ame e s ex- plo ing he le e age o be es ima ed; i – panel e ec s ha can be co ela ed wi h eg esso s; εi – he esidual, i.e., he panel o idiosync a ic es ima ion e o s, ha ing a a iance σϵ 2 . In ou case o a wo-s age GMM model and he examined pe iod 2012–2021, Ti = 8, he p ede e mined a iables a e he mac o- economic indica o s o he sha e o sa ings in GDP and he sha e o consump ion in GDP in selec ed coun ies, and he endogenous mic oeconomic a iable is he sha e o e ained ea nings among he eg esso s in he o al as- se s o he g oup a iable in he c oss-sec ion o he panel, i ms i. The assump ion o he unc- ionali y o he model is non-co ela ion νi and εi . In gene al, ROA and ROE a e ela ed h ough he DuPon analysis, wi h ROA se ing as a componen ha in luences ROE along wi h he inancial le e age mul iplie . A company ha e icien ly manages i s asse s and capi al s uc u e can achie e highe ROE and p o ide be e e u ns o i s sha eholde s (Chang e al., 2014; Soliman, 2008). Acco ding o he ORBIS da abase, he e we e a o al o 15,974 medium-sized companies ope a ing in he Human Heal h Ac i i ies sec o om 2012–2021. O hese, 6,954 companies we e based in he CEE coun ies, while he e- maining 9,020 companies ope a ed in Wes e n Eu ope. In pa icula , inancial da a om he bal- ance shee (i.e., o al asse s, equi y), as well as he p o i and loss s a emen (EAT, EBIT), wi hin NACE 86: Human Heal h Ac i i ies, subca e- go y 862: The Medical and Den al P ac ice Ac i i ies Sec o , which can also be di ided in o h ee ca ego ies, o ano he subca ego y 8623: Den al P ac ice Ac i i ies. F om he desc ip i e s a is ics in Tab. 1, wo impo an pieces o in o - ma ion a e d awn. Whe eas p o i abili y has de- c eased due o he COVID-19 pandemic among hose den is y companies wi h high owne ship 167 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance concen a ion measu ed h ough he indepen- dence indica o epo ed by Bu eau an Dijk, on he con a y, i has inc eased among hose companies wi h lowe owne ship concen a- ion. This does no mean ha he pandemic posi i ely a ec ed ea nings. Howe e , losses and di idends could ha e dec eased equi y and o al asse s acco ding o Equa ions (1–2) especially among companies wi h dispe sed owne ship. O cou se, u he analysis o he le- e age e ec o he DuPon amewo k using he GMM es ima ion is needed o p o e p ecise- ly in which coun ies he le e age inc eased, on he o he hand. The in e qua ile ange demon- s a es he a iabili y o nonno mally dis ibu ed da a (ins ead o he s anda d de ia ion while he da a a e no mally dis ibu ed). Appa en ly, nei he he compa ison be ween ROE and ROA, no hei change due o he pandemic can gi e us simila esul s. The a iabili y o ROE is a a highe le el. Albei , highe changes caused by he pandemic may be obse ed among den al companies wi h a low owne ship concen a ion. Acco ding o he signi ican e- sul s, da a ha e been ob ained only o nine Eu- opean coun ies: Belgium, Denma k, Finland, F ance, G ea B i ain, I aly, No way, Po ugal, and Spain. Due o he insigni ican esul s o no epo ing he in o ma ion abou hei owne - ship s uc u e, he o al numbe o in es iga ed companies is 1,128. Technically, he STATA x dpdgmm com- mand de eloped by K ip ganz (2019) has been deployed o ge he wo-s ep sys em GMM es- ima es in Tab. 2. In pa icula , i is he Blundell and Bond (1998) echnique wi h he obus bias-co ec ed a iance-co a iance ma ix o s anda d e o s, ecommended by Windmeije (2005). Su ely, he A ellano-Bond es o ze o au oco ela ion in i s -di e enced e o s o es ze o hypo hesis ha condi ions in he model a e alid. Fu he mo e, acco ding o Windmeije (2018), he p oblem o unde iden i ica ion has been es ed by C agg-Donald’s obus compa - a i e usabili y e alua ion (Lag ange Mul iplie e sion) and Kleibe gen-Paap’s obus limi ed in o ma ion maximum likelihood (LM e sion). Howe e , he p oblem o o e iden i ica ion has been e i ied by he Sa gan-Hansen es s. Only he esul s highligh ed in bold a e compa able. Dynamic panel da a modelling is ine icien in cases wi h insigni ican lagged L.ROE. Excep o Po uguese companies wi h a low owne ship s uc u e, he COVID-19 pandemic has a ec ed he echnical diagnos- ics o GMM models in a good way, especially in he case o companies wi h a high owne ship s uc u e. Bo h cases o den is y companies in No way ha e been jus alse-signi ican due o he p oblem wi h he unde iden i ica- ion o models. All hese cases a e highligh ed in g ey in Tab. 2 wi hin he nex sec ion. 3. Resea ch esul s Compa ed o he ele an e iewed li e a u e, se e al di e ences should be highligh ed be o e he discussion. E en hough Soliman (2008) decomposes e u n-on-ne -ope a ing-asse s (RNOA) using DuPon analysis, i has been di - e en in his pa icula case. Speci ically, cash and cash equi alen s should ha e been includ- ed in asse s, since companies ea ned a leas Ex an e pe iod 2012–2019 Pandemic pe iod 2020–2021 HIGH LOW HIGH LOW Median ROE 31.30 30.96 29.73 33.41 ROA 21.22 20.96 19.52 22.56 In e qua ile ange ROE 28.82 26.91 30.70 30.31 ROA 17.56 15.75 17.21 19.05 F equency 7,160 1,864 1,790 466 Sou ce: own Tab. 1: Desc ip i e s a is ics 168 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance some inancial e enues du ing he COVID-19 pandemic. Liquidi y and wo king capi al would ha e ecei ed a conside able deg ee o a - en ion conce ning he pandemic in u u e esea ch. Ne e heless, some ecen s udies used DuPon analysis wi hin heal h econom- ics esea ch (Chang e al., 2014; Tu ne e al., 2015), in es iga ing a speci ic indus y, such as he den al indus y, so-called den is y, is much mo e e icien han in es iga ing hospi als nei- he ha ing he po olio o only heal h business ac i i ies, no ocusing on a pa icula business ela ed o one speci ic heal h issue. Howe e , he esul s o GMM es ima es sugges ha Du- Pon analysis can iden i y no only inancially heal hie companies bu e en e eal a po en ial in es men oppo uni y compa ing den is y among di e en coun ies (Doo asamy, 2016; Fai ield e al., 2009; Nissim & Penman, 2001). Fu he mo e, a sizable public den al se ice wi h sala ied employees and equipmen ha is unded by gene al o local axes is a hallma k o he Be e idge model, some imes e e ed o as he Na ional Heal h Se ice (NHS) sys em. When i comes o educing he DMFT index (decayed, missing, and illed ee h), he No dic Fig. 1: Es ima ed DuPon inancial le e age using GMM models No e: ***p < 0.001; **p < 0.01, *p < 0.05; (insigni ican ), missing non- obus , o (X) alse signi ican esul s. Sou ce: own 169 2024, olume 27, issue 1, pp. 161–174, DOI: 10.15240/ ul/001/2024-1-010 Finance na ions and he UK ha e ou pe o med he Be - e idge egion in he ield o s oma ology (Pinilla & González, 2009). Se e al na ions, including he UK, Denma k, Finland, I aly, No way, Po - ugal, and Spain, ha e adop ed his concep wi hin he esul s. The Compulso y Uni e sal Heal h Insu ance Sys em, o he Bisma ck model, on he o he hand, bases heal hca e inancing on manda o y sala y paymen s. I is claimed ha he economic down u n, poli i- cal unp edic abili y, widening social di ides, and ising unemploymen a es make he implemen- a ion o he Bisma ckian insu ance p og am in many coun ies seem un easible. Coun ies in he FSE ( o me socialis economies) egion a e linked o his model. Al hough, Belgium and F ance ha e adop ed his sys em o den is y as well. Ne e heless, he ma e ial ha is cu - en ly a ailable omi s impo an in o ma ion e- ga ding he p ecise applica ion o he Bisma ck model o s oma ology, u he also acco ding o he owne ship s uc u e o den is y compa- nies (Deppe & O esko ic, 1996; Welch, 2003). The inancial le e age mul iplie magni- ies he impac o ROA on ROE in Tab. 2 wi h he sys em GMM es ima es. I a company akes on mo e deb ela i e o equi y (highe inancial le e age), a smalle ROA can s ill esul in a highe ROE due o he inc eased inancial le e age (Chang e al., 2014; Tu ne e al., 2015), i.e., hose companies wi h a LOW concen a ion o owne ship s uc u e. The compa ison is made om se e al poin s o iew. Fi s , he es ima ed le e age e ec can be compa ed om he owne ship concen a- ion poin o iew. Excep o he p e-pandemic pe iod in I aly, he le e age e ec o DuPon analysis measu ed by he equi y mul iplie ends o be sligh ly lowe among den is y companies wi h HIGH owne ship concen a ion in Fig. 1. Howe e , i ends o be lowe du ing he pandemic pe iod. I means ha u u e p o - i s will be many imes mo e han he cos o bo - owing amongs den is y i ms wi h mo e han one owne , which suppo s he idea o me ge s amongs den is y companies. This esul does make sense i he LOW dispe sed owne ship allows he use o deb inancing a he han equi y. On he o he hand, his esul is sup- po ed by Caselli and Neg i (2021), who a gued ha he owne uses equi y a he han deb , i.e., he case o a HIGH concen a ed owne - ship s uc u e. Hence, mo e owne s will ei he dec ease he cos s o capi al, as well as allow he usage o a highe le el o deb capi al. Sec- ond, he impac o he COVID-19 pandemic can be seen in selec ed cases among bo h g oups o den is y companies. The pandemic and he accompanying economic down u n ha e an impac on den is y, jus like hey do on o he heal hca e sec o s (Pa el, 2020), and e en om he DuPon inancial le e age poin o iew, his impac is e iden in Fig. 1. On he one hand, dec easing (o inc easing) equi y caused by he po en ial sha e o e ained ea nings (o ein- es men s) du ing he pandemic will inc ease (o dec ease) he p o i abili y o a i m. On he o he hand, any change will a ec ROE mo e han ROA. Howe e , we can see a nega i e change in he e ec o le e age in F ance (1.12 ex-an e, 1.04 ex-pos ), Po ugal ( om 2.00 o 1.31), and Spain (1.91 and 1.67) among companies wi h HIGH owne ship concen a ion. This esul sup- po s he idea o ein es men s du ing he pan- demic de eloped in he p e ious pa ag aph. Qui e he opposi e is he massi e posi i e change o le e age in Belgium (1.35 ex-an e, 1.69 ex-pos ) and I aly (1.13 and 1.76) among companies wi h LOW owne ship concen a- ion, caused by nega i e changes in equi y. Howe e , his esul could ha e been caused by me ge s in den is y, no only by losses e- la ed o he pandemic. In he Bisma ck model (i.e., Belgium and F ance), den al ca e is dependen on social insu ance con ibu ions, whe e bo h employe s and employees con ibu e o a heal h insu ance und. Hence, he p o i abili y o den al ca e can be in luenced by pa ien ’s abili y o access and a o d den al se ices based on hei insu ance co e age. Den is s can nego ia e eimbu se- men a es wi h insu ance companies, which can a ec hei income. On he o he hand, in he Be e idge model (i.e., I aly, Po ugal, and Spain), den is y is p ima ily unded by he go e nmen h ough axa ion, which means ha den al ca e may be mo e likely o be in- cluded as pa o he publicly unded heal hca e sys em. The p o i abili y o den is s can be in luenced by go e nmen -se eimbu semen a es, which may be lowe han wha hey could cha ge in a pu ely p i a e sys em. How- e e , a consis en pa ien base and educed adminis a i e bu den could o se his. Mos impo an ly, he COVID-19 pandemic a ec ed di e en economies a e y di e en le els, while he I alian economy belongs o hose mos a ec ed in he wo ld. Pe haps ha would