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Determinants of Firm Delisting on the Prague Stock Exchange

Author

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  • Zuzana Fungáčová
  • Jan Hanousek

Abstract

This research investigates the emergence of stock market in the Czech Republic. We use Czech mass privatization as an experiment that allows us to analyze under what conditions a viable stock market arises. On the Prague Stock Exchange (PSE), unlike its counterparts in Poland or Hungary, exceptionally large amounts of shares were delisted e.g. excluded from public trading soon after trading at this market began in 1993. We estimate the determinants of shares delisting analyzing the period 1993-2004. Using firm-level data on listed and delisted companies we show that it was possible to prevent massive delisting if certain pre-privatization and privatization characteristics of the companies had been taken into account when deciding which companies to place on the stock exchange for public trading following the mass privatization. This result has important implications for establishing stock markets in emerging economies.

Suggested Citation

  • Zuzana Fungáčová & Jan Hanousek, 2011. "Determinants of Firm Delisting on the Prague Stock Exchange," Prague Economic Papers, Prague University of Economics and Business, vol. 2011(4), pages 348-365.
    • Handle: RePEc:prg:jnlpep:v:2011:y:2011:i:4:id:404:p:348-365
    DOI: 10.18267/j.pep.404
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    References listed on IDEAS

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    More about this item

    Keywords

    privatization; transition economy; stock market; delisting;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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