Ownership structure and investment finance in transition economies
AbstractUsing survey data on 157 large private Hungarian and Polish companies this paper investigates links between ownership structures and CEOs' expectations with regard to sources of finance for investment. The Bayesian estimation is used to deal with the small sample restrictions, while classical methods provide robustness checks. We found a hump-shaped relationship between ownership concentration and expectations of relying on public equity. The latter is most likely for firms where the largest investor owns between 25 percent and 49 percent of shares, just below the legal control threshold. More profitable firms rely on retained earnings for their investment finance, consistent with the 'pecking order' theory of financing. Finally, firms for which the largest shareholder is a domestic institutional investor are more likely to borrow from domestic banks. Copyright (c) 2007 The Authors Journal compilation (c) 2007 The European Bank for Reconstruction and Development .
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Bibliographic InfoArticle provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.
Volume (Year): 15 (2007)
Issue (Month): (07)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0967-0750
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- Grosfeld, Irena, 2009.
"Large shareholders and firm value: Are high-tech firms different?,"
Elsevier, vol. 33(3), pages 259-277, September.
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- Tomasz Mickiewicz, 2009. "Hierarchy of governance institutions and the pecking order of privatisation: Central-Eastern Europe and Central Asia reconsidered," Post-Communist Economies, Taylor & Francis Journals, vol. 21(4), pages 399-423.
- Olga Lazareva & Andrei Rachinsky & Sergey Stepanov, 2008. "Corporate Governance, Ownership Structures and Investment in Transition Economies: the Case of Russia, Ukraine and Kyrgyzstan," Working Papers w0119, Center for Economic and Financial Research (CEFIR).
- Mykhayliv, Dariya & Zauner, Klaus G., 2013. "Investment behavior and ownership structures in Ukraine: Soft budget constraints, government ownership and private benefits of control," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 265-278.
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