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Why Companies Go Private in Emerging Markets? Evidence from Poland

Oskar Kowalewski () and Krzysztof Jackowicz
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Krzysztof Jackowicz: Leon Kozminski Academy of Entrepreneurship & Managment

Finance from EconWPA

Abstract: In recent years the number of going private transactions has sharply increased in emerging markets. The purpose of this study is to establish the financial characteristics of companies that have gone private using a dataset comprising of Polish companies. We use a probit model to distinguish the difference between firms that went private and companies that did not. We find that the probability of going private grew with a rise in the concentration of foreign ownership, an increase in the relative level of free cash flows, a decrease in the level of long term debt, and a decrease in the liquidity of share trading. The results obtained are important both for investors wishing to identify entities characterized by a high likelihood of going private and for governmental authorities evaluating the methods and rationality of privatization mature state- owned enterprises.

Keywords: Going Private; free cash flow; information asymmetry; ownership structure; emerging markets (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fin and nep-tra
Date: 2005-11-25
Note: Type of Document - pdf; pages: 30
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:0511013

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