INNOVATION AND FINANCIAL PERFORMANCE IN TURBULENT ECONOMIC SITUATION – EVIDENCE FROM VISEGRAD GROUP Katarzyna Prędkiewicz Wroclaw University of Economics Faculty of Engineering and Economics Department of Corporate Finance Management ul. Komandorska 118/120 53-345 Wroclaw Poland e-mail: katarzyna.predkiewicz@ue.wroc.pl Pawel Prędkiewicz Wroclaw University of Economics Faculty of Economic Sciences Department of Finance ul. Komandorska 118/120 53-345 Wroclaw Poland e-mail: pawel.predkiewicz@ue.wroc.pl Abstract The aim of the paper was to proof that innovations have a positive impact on companies’ financial outcomes. Based on 11 869 financial statements of companies operating in the manufacturing industry in Poland, the Czech Republic, Slovakia and Hungary in period from 2006 to 2012 authors confirmed that companies possessing even one patent have higher rates of return (EBITDA margin, ROS, ROA) than other, non-innovative entities. In case of ROE it was found that indicator is lower in innovative companies what might be explained by higher operational risks associated with innovative activities and the need to involve a relatively substantial amount of equity, due to possible difficulties in obtaining outside capital. Authors also confirmed that during the period of economic growth innovative companies have recorded a higher increase of income than non-innovative ones, but in the year when crisis had started the situation has changed and the revenue growth was lower for innovative firms. Financial and qualitative data for testing were taken from the Amadeus database provided by Bureau van Dijk. ANOVA method and OSL models were used to test the hypothesis. JEL classification: O03, O34, L25 Keywords: innovation, financial performance, economic crisis, patents